Even in our increasingly globalized world, there are traditional loci of power where the movers and shakers of the international community like to congregate. But in the next decade, there could be some major changes.
Real estate consulting firm Knight Frank released its annual power ranking of important cities for the rich, and for the second year in a row, London is at the top spot. This year's list doesn't look very different from last year's, except for a few cities being shuffled around. Knight Frank's prediction for the year 2024, however, looks slightly different.
Image Credit: Knight Frank
According to the firm, London will be finally dethroned by New York City while Mumbai kicks Paris off the list. Cities in Asia and the Middle East will increasingly gain prominence, while the U.S. and China will remain the only nations with two cities on the list.
Knight Frank takes four factors into account: economic activity, quality of life, knowledge and influence and political power. It also considers how many ultra-high-net-worth individuals (UNHWI) live in each city — these are people with $50 million or more in net assets, excluding their primary residence.
"Our results suggest that by 2024 New York should surpass London as its share of the world's UHNWIs rises and the city becomes increasingly important to Chinese, Russian and even European UHNWIs," the report concludes.
Image Credit: Knight Frank
The problem? Nearly every city on the Knight Frank list is plagued by a huge income inequality problem, as are prospective candidates such as Istanbul, Sao Paulo, Mumbai and Abu Dhabi. Billionaires may see their fortunes improve at these cities, but that doesn't mean that life is getting better for the rest.
In fact, the concentration of plutocrats drives up the cost of living and makes it harder for others to live there. It's no wonder that the Knight Frank list overlaps so much with the list of most expensive cities in the world; while money, power and influence may make these cities "important," they certainly haven't become more affordable or livable.
While this report is far from definitive, it reflects how a lot of wealthy people view the global landscape. And the message is clear: As emerging markets coalesce around certain pockets of power, they will challenge the cities that have been the traditional centers of international commerce and influence.
The report also highlights five hotspots that did not make this year's list but are set to impact the world stage in the years to come: Sao Paulo, Istanbul, Abu Dhabi, Mumbai and Sydney. These cities' rapid growth and increasing concentration of UHNWIs are set to shape their global prominence in the coming years.
Does the U.S. have anything to worry about? No. Even as the markets in Asia and the Middle East expand and grow more powerful, they won't seriously challenge America's wealth and influence. Knight Frank also estimates that Asian cities will be too busy being locked in a "power struggle," as there is no clear dominant city in the region — unlike New York City, which looms over all of North America.
Again, this is just one consulting firm's prediction, and it hardly has the final say. In fact, not only is this kind of arguably subjective categorization ripe for debate, but it's the kind of list that's really only pertinent to a select few people. While the UNHWIs might like to know which city is making moves over the next few years, as long as major centers of wealth more or less stay in the same places, the other 99.999% of us have little to really worry about. Still, the analysts at Knight Frank believe that "the mayors of London and New York can sleep easy" — for now.