Germany – The Future of HNWIs to 2016: Wealth in the Powerhouse of Europe
With a large population of approximately 82 million people, the world’s fourth-largest economy and a leading role in European politics, Germany is one of the most important countries in Europe. Germany is a founding member of the EU, an early adopter of the Euro, and a member of the United Nations, NATO, the G8 and the OECD. Germany is home to 37 of the world’s 500 largest companies, the top three being Volkswagen, Daimler and Siemens. Transport and logistics is the largest economic area in the country, as it accounted for 15.7% of German GDP in 2011.
HNWI – Slow rebound from the global economic crisis and moderate growth forecast
Germany contains the fourth-largest number of HNWIs in the world after the US, Japan and China. There were over 1.2 million HNWIs in Germany in 2011, which accounted for roughly 36% of Germany’s total wealth. The total number of HNWIs in Germany declined by 8.4% over the review period (2007–2011), while HNWI wealth dropped by 12.5%. The wealth of HNWIs in Germany was negatively influenced by a large decline in German stock markets in 2008 and a slow stock market recovery since the global economic crisis. Growth in HNWI volumes and wealth value will be moderate over the forecast period, as projections are constrained by ongoing concerns of a double dip recession in European markets. However, the growth in volume of HNWIs in Germany is expected to be greater than in other major EU countries such as the UK and France.
Asset classes – HNWIs will move assets away from real estate and towards alternatives and fixed income offerings
Equities were the largest asset class for HNWIs in Germany in 2011, accounting for over 20% of total HNWI assets, followed by real estate, business interests, fixed income, alternatives and cash. Fixed income, alternative assets and cash holdings were the best performing asset classes over the review period. Against international norms, the share of German HNWIs assets held in real estate also increased substantially over the review period, as the German real estate market outperformed global markets. However, WealthInsight expects a movement away from assets in real estate and towards alternatives and fixed income products over the forecast period. Alternative allocations are forecast to rise by the highest margin, as HNWIs seek to take advantage of the development of alternative asset products that invest in opportunities in Asia, especially in China
Private Banking – Well developed wealth management market
The wealth management sector in Germany is well developed and had assets under management (AuM) of over US$1 trillion at the end of 2011. This represents 28% of the total wealth of Germany’s HNWIs, which is above the global average of 20%. German HNWIs account for 57% of the total AuM of Germany’s wealth management sector, meaning that 16% of total German HNWI wealth is managed by the German wealth management sector. There are over 50 private banks and over 300 wealth managers currently operating in Germany. The ten leading private banks control 40% of the wealth management market in Germany. Among the 10 leading cities for UHNWIs: Essen, Bonn, Hannover and Stuttgart have the lowest number of wealth managers per UHNWI. Therefore, these cities may offer the greatest potential for the wealth management sector over the forecast period.