Kano, Nigeria – The rise of Africa’s super-rich has put the continent on the map as the new frontier for global luxury brands. WealthInsight, a global research and analysis firm focused on the world’s richest individuals, has singled out 10 cities where Africa’s ultra-high-net-worth individuals (UHNWI), those with over $30 million of net assets excluding their primary residence, live.
Marrakesh, Morocco – Over the next five years, 13 of the 20 fastest-growing economies in the world are forecast to be in Africa. Morocco’s bustling tourist center Marrakesh is in ninth place with 15 residents worth over $30 million.
Addis Ababa, Ethiopia – Real estate giant Knight Frank ranked Ethiopia’s capital as one of its Global Cities of the future in its 2015 Wealth Report. The city is in eighth place, hosting 21 UHNWIs.
Abuja, Nigeria – Nigeria is among the countries expected to have the most potential for luxury goods demand despite recent troubles. Its capital Abuja has 23 ultra-high-net-worth individuals in residence.
Dar es Salaam, Tanzania – The rise of the urban middle class is encouraging modern retail development in many of Africa’s major cities. Tanzania’s trade center and economic capital Dar Es Salaam has 36 super-rich individuals.
Nairobi, Kenya – Single malt whiskey is a popular luxury alternative to beer in Kenya, a country whose economy has grown rapidly in recent years. The capital Nairobi has 69 UHNWIs.
Cape Town, South Africa – The number of African individuals with $30 million in assets is set to more than double over the next decade. Cape Town has long been one of Africa’s most affluent cities, and has 115 ultra-high-net-worth individuals.
Lagos, Nigeria – In 2013, Lagos, which has 131 UHNWIs, spent more on champagne than the whole of South Africa. With three cities in the ultra-rich list, it’s not surprising that Nigeria is now recognized as Africa’s largest economy, following a recalculation of its GDP in 2014.
Cairo, Egypt – Egypt’s capital has the second highest number of high net-worth individuals — 150. However, that’s still only half that of the city which claims the top spot on the list.
Johannesburg, South Africa – The commercial capital of South Africa has far more millionaires than any other African city. With 298 people with a net worth over $30 million, it’s the city with the most ultra-rich individuals in Africa.
Fastest-Growing African Cities for Millionaires. Credit: KPMG & Benan Barwick/CNN
Wealthy Nigerians used to travel abroad to get their fix of luxury goods.
However these days, they can take a stroll around Victoria Island, an exclusive neighborhood in Lagos where brands like Porsche, Hugo Boss, and Ermenegildo Zegna line the streets.
The Nigerian city is among African metropolises which have seen some of the highest growth in the number of millionaires on the continent. Others include Luanda, Dar es Salaam, and Accra, which is predicted to nearly double its millionaire count from 800 in 2012 to 1,500 in 2020.
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If the growth continues, these cities could join an existing club of African wealth hubs hosting the so-called ultra-high net worth individuals, typically those with over $30 million of net assets excluding their primary residence. These centers of affluence are spread from Johannesburg in the south, through Lagos in the west and Nairobi in the east, to Cairo in the north.
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This emerging class of Africa’s new millionaires has been pushing the demand for luxury products across the continent, with sales of high-end products growing by a third between 2008 and 2013. However, they are no longer concentrated in southern Africa, traditionally the wealthiest part of the continent.
Nigeria is now one of the fastest growing markets for French Champagne and digital televisions according to a report by Deloitte, and in 2013 LVMH’s seven Nigerian branches outsold its 600 South African stores.
“Africa is one of the fastest growing regions in terms of middle class,” says Fflur Roberts, Head of Luxury at Euromonitor, a market research provider. “It’s due to a mix of rising incomes, rising population but also growth slowing in other emerging markets.”
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Luxury brands tend to enter country markets through distributors, benefiting from local knowledge of their partners but still retaining a significant amount of control over how their name is marketed in that country. “Getting a new brand in a new market where they don’t fully understand the operating environment would be very dangerous for that brand,” explains Roberts.
She warns that in spite of potential, the future of luxury in Africa is dependent on reforms taking place: “It will rely on infrastructure and the operating environment such as security and how trading is done,” she says.
When it comes to what they choose to splash their cash on, Africa’s rich like to stick to well-known global labels that carry an automatic badge of status.
Africa’s growing appetite for luxury goods
“Generally the brands they buy will be more ostentatious compared to somebody in the more developed, mature markets. It’s going to be the Louis Vuitton, the Gucci, the Prada,” says Roberts.
She adds that this could be down to the fact that a typical luxury consumer in Africa is much younger than those in mature markets such as Western Europe, who tend to be in their 50s and 60s.
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“They are in their late twenties or thirties so it’s very much new wealth, and they will be looking towards luxury as a means of showing status and success,” says Roberts.
However, in spite of mainstream brand’s dominance, smaller home-grown labels also see the growth in appetite for luxury goods as a valuable opportunity.
“Africa has all the foundations that are needed to create a real vibrant luxury industry,” says Swaady Martin Leke, Ivorian entrepreneur and founder of the Johannesburg-based luxury tea brand Yswara.
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“We have the craftsmanship, we have the heritage, we have a very rich culture that doesn’t date just 20 years, but centuries, thousands and thousands of years of know-how and craftsmanship. So here is this continent where you have all the raw material and the know-how, but what is missing is the link to luxury.
“Now is the time and you need to start positioning yourself, because Africa is getting richer, that’s for sure,” she adds.
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