Crash stymies creation of new Irish multimillionaires

The numbers joining Ireland’s richest club grew at the slowest rate out of 110 countries in the decade from 2004 – behind growth rates in Spain and Portugal – a new survey shows.

According to the Wealth Report from Knight Frank, the number of Ireland's ultra-high net worth individuals (UHNWI) – those with assets of $30 million or more – grew just 16 per cent from 2004-2014, up from 714 to 825 people. This compares with a growth rate of 38 per cent in Spain, 31 per cent in Portugal, 25 per cent in the UK and 386 per cent in China.

The report forecasts that a further 158 Irish people will join the exclusive UHNWI club between now and 2024, while Ireland is likely to see 23 people move into the “centimillionaire” club, with assets of more than €100 million, and one new Irish billionaire will be created over the next decade.

Liam Bailey, head of international research and architect of the report, said the main driver in the results was the weakness of the property market, "which formed an unusually large share of wealth portfolios" during the period.

Property is unlikely to play as a big a role in creating and growing wealth going forward however, with Adrian Truick, director of investment for Knight Frank in Ireland, pointing to those from the technology sector, such as the Collison brothers of Stripe, or Colm Lyons, who recently sold his Realex business for €115 million, as likely forming the basis of Ireland's new wealthy.

Ireland was one of the strongest-performing property markets over the past year and is likely to benefit from a preference by wealthy investors to allocate more of their funds to property investments outside their own countries.

Middle Eastern investors in particular were cited as moving up the risk curve to tier-two cities and UK regions, as well as peripheral euro-zone markets such as Ireland.

“We’re seeing an ongoing desire from investors to look at international markets,” said Bailey, noting investors were looking to diversify.

Truick said interest from the Middle East in Ireland was “only starting” but was beginning to get traction. While US investors have traditionally been the most active in Ireland, Truick noted that he is currently working with a family office from the Middle East which is looking to acquire an office building in Dublin.

“They’ve started to look at the Irish market as a follow-on from London,” he said.

With the euro approaching parity with the dollar, buying property in Ireland has become considerably cheaper for international investors and will likely drive continued interest.

“We expect Ireland’s attractiveness as a destination for prime investors to be enhanced by the continued depreciation of the euro versus the world’s major currencies,” Bailey said.

Indeed, according to Knight Frank Irish property is now 14 per cent cheaper for a UK-based buyer, from a currency perspective; 17.2 per cent cheaper for a Swiss buyer; 15.5 per cent cheaper for a Singapore-based buyer; and a significant 23 per cent cheaper for a US buyer.

For example, an Irish property that would have cost a US- based buyer € 1 million last year would now cost €771,949 based on currency movements alone.