City fortunes: The sources of wealth and international homeownership of the world’s urban wealth elite

Rowland Atkinson - Professor, School of Geography & Planning, University of Sheffield

Katie Higgins - Research Fellow, Department of Social Policy & Intervention, University of Oxford

Jonathan Bourne - Centre for Advanced Spatial Analysis, University College London

Nearly 70 years ago the sociologist C Wright Mills published one of his most famous works, The Power Elite, in 1956. The book’s chapters addressed the different strands of this variegated elite - splitting analysis between the military, political and wealth elites. In a chapter entitled Metropolitan 400, he drew on his extensive personal knowledge of the the rich in New York and other US cities, using their respective social registers which listed the families and individuals who were considered to be part of urban ‘society’ at that time. Mills found a complex social ecosystem in which old money jostled with new, as wealth emerged alongside the new economies of the nation’s metropolitan centres. As we look at the rich of cities like London, Sydney or Hong Kong today we might wish to ask similar questions – who are the richest, where is there many from and how international are they?

As an arbitrary but still ‘chunky’ figure, we thus took Mills’ lead and examined the richest 400 residents of 10 key cities around the world using a subscription to a commercial dataset which offers a kind of census of the richest individuals around the world. This database allows us to build important insights into the estimates of the scale of the wealth, industry sectors generating that wealth, and the spread of homes and assets they own. We focused our analysis on ten cities - Frankfurt, Hong Kong, Johannesburg, Lagos, London, Mexico City, New York, Rio de Janeiro, San Francisco and Sydney.

The varied ‘character’ of urban fortunes

Our analysis detailed the work or industry activity, financial roots, and residence patterns of the richest in each city. The data was divided as follows, with the sources of wealth having 11 classes, or sectors; wealth acquisition had two classes (Inherited or Self-Made), and the measurement of second residences had up to 262 classes, representing the total number of countries in the world where people might have a second or more homes. [RE4] [RA5] 

Starting with the question of whether the fortunes of the richest are ‘dynastic’ (inherited) or ‘new’ money we found that the wealth elites of Frankfurt, Hong Kong, London, and New York were more 'dynamic' in the sense that they have relatively higher percentages of ‘self-made’ individuals. Mexico City has fewer self-made individuals than many other of the cities, with only 36% of so-called UHNWIs (those with $30m liquid assets or more) being inheritors. San Francisco, on the other hand, had the highest fraction of self-made UHNWIs, with 84% of them being ‘self-made’. These findings chime with everyday impressions of the kind of economies dominating these cities today - though in many cases rich individuals may have wealth generated by investments or companies operating elsewhere in the globe.

Our next analysis, of the key economic sectors contributing to the wealth of the richest 400 individuals revealed significant differences between and within wealth elites. For example, [RE6] industrial, financial, and real estate dominate the roots of fortunes for Frankfurt's wealth elite, while financials and ‘consumer discretionary’ (such as consumer products) dominate in Johannesburg. In Lagos the key sectors are energy, and financial services. Meanwhile the wealth elites of San Francisco and London were primarily represented by the tech sector, but London overall has very high diversity in the sources of wealth of its rich with little sense that finance dominates the roots of capital among its richest residents.

Finally we looked at the reported locations of the second and multiple other residences reported. Here we found that London really stood out for having a wealth elite with the highest number of additional international residences. You can see the overall numbers of individuals reporting additional homes in other cities in the figure below – this shows that London and New York are by far the most popular cities in which the rich of our ten cities have additional residences, this really highlights the strength of attachment of the global rich to these centres.

Conclusion

Debates about whether the rich are footloose or rooted to urban spaces look set to continue as debate heats-up in the UK and elsewhere about how to ensure fair contribution to public spending requirements. Our work shows that the key centres of cities like London and New York are very popular as spaces of primary and secondary residence and it seems unlikely that this hierarchy of desirability will be shaken by marginal changes in taxation, such as those being proposed. The sense of locally distinct wealth and power elites that emerges from the data enables interesting insights into the disconnect or connection to the local economy of cities, with London standing out for its immense sectoral diversity. This work offers a new perspective on how we need to think of the richest as a diverse group and one rooted in the local economies, politics and social conditions of the cities they live in.