Growth in Ranks of Millionaires Slows

The ranks of the world's millionaires grew at the slowest pace in four years in 2007 during the seizure of credit markets and a shift to "safer" investments, according to a survey by Capgemini and Merrill Lynch.

The number of people with more than $1 million to invest, not including the value of their homes or consumable goods, increased 6 percent, to 10.1 million last year, the firms said in their annual World Wealth Report, published yesterday. That was a slowdown from 8.3 percent in 2006.

The world's millionaires increased the value of their assets by 9.4 percent, to $40.7 trillion, a decrease from the 11.4 percent rise in 2006, the survey showed. The collapse of the U.S. subprime-mortgage market in July and its fallout triggered more than $390 billion of mortgage-related losses and write-downs by the largest financial institutions.

"We expect the environment to remain challenging for the next six months to a year," Nick Tucker, market leader for Merrill's British private-client division, said yesterday. Slower economic growth may lead to a decline in the number of millionaires in the United States and Britain this year, he added.

Wealthy individuals poured 44 percent of their assets into "safer" investments, such as deposits and bonds, last year, Merrill and Capgemini said. That happened as they pared their holdings of real estate investments to 14 percent of their assets, down from 24 percent in 2006.

Turmoil in credit markets also weighed on the growth of assets under management for the global wealth-management industry last year, with the median increase slowing to 12 from 14 percent in 2006, a separate survey by Scorpio Partnership, a consulting firm in London, showed yesterday.

The slump in the U.S. housing market is still eroding the wealth of some individuals. Median home-price declines have been as much as 25 percent in 14 of 19 wealthy New York suburbs in Connecticut, New Jersey and Westchester County since the start of the year, according to a Bloomberg survey of brokers and multiple-listing services.

The number of millionaires in emerging markets jumped, as India and China posted gains of 23 and 20 percent, respectively, in the Merrill and Capgemini report.

"The impressive growth of emerging economies was boosted by thriving exports and heightened domestic demand," Tucker said.

The number of millionaires rose 8.7 percent in the Asia-Pacific region and 16 percent in the Middle East, while growth slowed to 2.1 percent in Britain and about 4 percent in the United States.

China is edging closer to Britain, recording 415,000 millionaires last year, compared with 495,000 in Britain. There were more than 3 million wealthy individuals in the United States, Merrill and Capgemini said in the report, which covers 71 countries.

The International Monetary Fund predicts that this year, advanced economies will suffer their fastest price gains since 1995 and their weakest expansion in seven years.

The number of "ultra-high" net-worth individuals, or people with net assets of at least $30 million, advanced 8.8 percent, to 103,320, according to the survey. High net-worth individuals will amass total wealth of $59.1 trillion by 2012, or annual growth of 7.7 percent, the firms predicted.

Wealthy individuals didn't forgo expensive purchases last year. The Forbes Cost of Living Extremely Well Index, which tracks the annual cost of a basket of goods including art and jewelry, rose 6.2 percent in 2007, according to Merrill Lynch and Capgemini.