Global wealth: bringing home the Bacon - Financial Times

Global wealth: bringing home the Bacon

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November 15, 2013

Sales of diamonds and paintings show wealth surging to new highs

What’s your fancy? A triptych of a contorted but famous painter or a fistful of rocks? Money sloshed round the salerooms this week like the boom times had never ended.

In New York, $142m was paid for three studies of Lucien Freud by his one-time friend Francis Bacon. This was a new auction record for an artwork, set in an event that raised $700m overall, the highest ever for a single sale. In Geneva, meanwhile, an orange diamond went under the hammer for $35.5m or a record $2.4m per carat – only to be overshadowed, a day later, by $83m for a 59.60-carat pink sparkler. Given the pictures of Philippines devastation flashing around the world, such heady luxury spending seemed surreal, to say the least.

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But the sale results do underscore the extent to which global wealth has not only recovered its pre-crisis levels, but surged to new highs in spite of the economic uncertainties. Total personal wealth worldwide now stands at $241tn, according to last month’s Credit Suisse Global Wealth Report. That is up 5 per cent in the 12 months to June, and by 68 per cent since 2003. (The pre-crisis peak was passed in 2010.) On a per-adult basis, the latest total works out at $50,000, or, for Switzerland alone, above $500,000. And banish any idea that these advances are due solely to China’s rise. Over the past year, the US has clocked up the biggest wealth gains. Germany, France and Italy were also among the top five nations.

Of course, almost half this total wealth is held by the richest 1 per cent of adults. Moreover, the trend for affluence to expand faster at the top of the wealth pyramid – which has been evident since 2000 – shows no sign of abating. The number of dollar millionaires grew 6 per cent last year, while the cadre of ultra wealthy individuals (assets over $50m) rose 10 per cent to about 100,000. What is changing, though, is the make-up of that very top elite. The portion from Bric nations was just 5 per cent in 2000; now it is over a fifth.

All of which supports anecdotal evidence that the bounceback in art prices since 2009 is partly due to a coterie of new, wealthy Asian and Russian buyers. And if wealth forecasts are correct, there could be more gains to come: the Credit Suisse report estimates the number of millionaires should increase 50 per cent by 2018, to 48m. Who knows? Expensive artworks and gems could yet be good investments. Although Sam Goldwyn may have been closer to the mark: “I paid too much for it, but it’s worth it,” he once quipped.