Basic materials have been the driving force behind the growth in Russian high net worth individuals (HNWIs), but research by WealthInsight has found that the technology sector has been booming in recent years. Wealth managers should pay attention to this fast-growing sector.
Since 2007 the number of ultra-wealthy Russians (those with net assets of US$30 million or more excluding their primary residences) who acquired their wealth through technology has grown by 21% – more than any other major sector. Research by WealthInsight finds that, at the end of 2011, the technology sector is the primary source of wealth for 5.7% of Russia’s ultras.
At present, compared with the other ‘BRICS’, only Brazil is behind Russia in its ratio of ultra-HNWIs coming from the technology sector.
But the Russian technology sector is a growing market: in 2011, Russia overtook Germany as the European market with the highest number of unique visitors online and internet penetration rates, relatively low compared to developed markets, are expected to increase from 40% to 70% over the next four years. As the internet market continues to develop, this will create opportunities for companies with an understanding of local markets and political nuances, leading to an upsurge in the numbers of HNWIs coming from this sector.
WealthInsight research also shows that:
- Between 2007 and 2011 the number of Russian millionaires decreased: from 194,870 high net worth individuals (HNWIs) in 2007, to 159,558 in 2011.
- Basic materials is the most important wealth sector in Russia, constituting the primary source of wealth for 26% of ultra-HNWIs (those with wealth >$30m).
- By 2016 the total wealth of Russia’s HNWIs is projected to grow by 39%, to reach $1,304 billion. The number of HNWIs will grow to 216,000 individuals in 2016.
- For the purposes of this report, the phrase “coverage period” refers to the period of 2007–2016, while the “review period” relates to the years 2007–2011 and the “forecast period” relates to the years 2011–2016.
- “High net worth individuals” otherwise known as “millionaires” or “HNWIs” refer to individuals with net assets of US$1 million or more excluding their primary residences
- “Ultra high net worth individuals” or “UHNWIs” are individuals with net assets of US$30 million or more excluding their primary residences
- Billionaires are those HNWIs with wealth of US$1 billion or more, including equities, bonds, cash and deposits, fixed-income products, real estate (excluding primary residence), alternative assets and business interests.
For more information see WealthInsight’s report on Russia, “Russia – The Future of HNWIs to 2016: The Land of Oil and Gas”.