Junk or not, SA’s rich have never had it so good

Time to tighten that belt? Not if you bought it at Louis Vuitton or Gucci.

As South Africa grapples with its new-found junk status and an impending recession, the  ultra-rich remain unfazed, smoothly side-stepping the economic storm — and inadvertently broadening the wealth gap.

They’re popping Dom Perignon on luxury wineland estate Val-de-Vie, lining their walk-in closets with Dolce & Gabbana and living large with their Porsches and Bugattis.

Economists warned this week that most South Africans will have to trim the fat, cutting out luxuries such as expensive shoes, fancy holidays, new wheels, new homes and dining out, following the downgrades by rating agencies S&P Global Ratings and Fitch.

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But a report by Sandton market-research group New World Wealth and AfrAsia Bank suggests the party is still on for South Africa’s dollar millionaires.

According to the report, South Africa’s total wealth — the private wealth held by individuals including property, equities and business interests — stands at $610-billion (more than  R8-trillion), putting the country  at the top of the wealth-ranking list in Africa, ahead of Egypt, Nigeria, Algeria and Morocco.

As of last year, South Africa had 40,400 high-net-worth individuals and 2130 dollar multimillionaires.

Despite its recent turmoil, Egypt ranks second on the list with 18,100 high-net-worth individuals and 950 dollar multimillionaires.

“Total wealth held in South Africa was up by around 5% in 2016, which was pretty good and slightly above the global average of 3% growth for the year,” said Andrew Amoils of New World Wealth.

Mauritius has seen strong growth in millionaires, particularly South Africans.

“We estimate that 280 millionaires have moved there from South Africa since 2006.”

Johannesburg, which incorporates Sandton, has the highest density of  rich people in Africa, some 18,700 with a total of $245-billion.

Sandhurst, Hyde Park, Bryanston, Saxonwold, Houghton, Camps Bay, Constantia and Bantry Bay rank among the country’s most affluent suburbs.

Durban North tycoon Vivian Reddy, who owns a string of lucrative businesses, properties and cars, has no plans to tighten his belt.

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“The reality is that the super rich are not affected by South Africa’s junk status or downgrade. They've already made their money and many have [their wealth] in offshore accounts.

“We may lose money on paper in terms of shares, but that’s a temporary issue as shares go up and down all the time.

“The super rich don’t lose too much sleep over these issues.”

Reddy has sold his private jet, but always flies business or first class.

“I do most of my shopping in Sandton because that’s where the big-name brands are now based. I used to shop overseas for Louis Vuitton, Versace and Armani.”

Looking at the broader African wealth picture, the report found that collectables, especially art, wine and classic cars, are an increasingly popular way for Africa’s rich to store their wealth.

Collectables accounted for 1.1% or $8.8-billion of the assets of rich Africans in 2016, compared with 0.6% in 2006.

The report estimates that Africa’s rich held $870-million worth of fine art at the end of 2016.

It also noted a growth in super luxury watches — about $46-million was generated in African sales of these watches in 2016.

As for property, which usually constitutes 25% to 30% of net assets of the average wealthy African, beach-front villas and residential estates are most popular.

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Cape Town’s Clifton and Bantry Bay boast the most expensive properties in Africa, followed by Grand Baie and Port Louis in Mauritius, and then Sandton.

The tipples of choice for those with cash to splash include Johnnie Walker Blue Label, Dom Perignon, Hennessy and Glenmorangie.

The report also unpacks items commonly found in  rich people’s wardrobes, including Louis Vuitton handbags, Jimmy Choo, Christian Louboutin and Gucci shoes, Dolce & Gabbana dresses and Paul Smith and Armani suits.

South Africa is the top private-jet market in Africa — 160 multimillionaires own private jets, and 420 regularly use them.

The top-selling luxury cars for 2016 include Porsche, Ferrari, Bentley and Rolls-Royce.

Dawie Roodt, chief economist at the Efficient Group, said the wealth gap in South Africa would continue to widen because the rich are “well connected and well informed about technology”.

“They make use, or maybe misuse, of existing structures and are always one step ahead.

“I have many wealthy individuals as clients and  they are brilliantly positioned.

“They have been talking to asset managers and are positioning themselves very well. The downgrade was no surprise for wealthy individuals.”