The Changing Landscape of Wealthy Immigration
Over the past decade, there has been a steady increase in millionaire migration, and Australia has consistently been a magnet for wealthy individuals from around the world. This trend has been amplified by the global recovery from the COVID-19 pandemic, as Australia’s strong economic recovery and successful management of the crisis have positioned it as an attractive safe haven. While the US, China, and India have traditionally been the main sources of wealthy migrants, the report highlights the increasing influx of HNWIs from the UK. This shift can be attributed to factors such as post-Brexit tax benefits and the desire for financial security and quality education.
The Henley Private Wealth Migration Report 2023
The prestigious Henley Private Wealth Migration Report 2023 has ranked Australia as the most desirable global destination for HNWIs with assets in excess of $1.47 million. According to the report, Australia is expected to attract a staggering 5,200 HNWIs by the end of 2023, outpacing all other countries. This influx of wealthy migrants is expected to continue into 2024, with global millionaire migration numbers estimated to reach 122,000 by the end of 2023 and 128,000 in 2024.
An Open Economy with Worldwide Connections
Australia’s trade success is based on its adaptable, globally connected economy, which accounts for over 40% of GDP. Strong links with Asia, accounting for 75% of trade, position Australia as a gateway to Asian markets. Its diverse population, with 29% born overseas and many speaking non-English languages at home, enhances global engagement.
Foreign investment strengthens key sectors. As a net capital exporter, China’s foreign direct investment (FDI) is growing steadily at 7% per year, exceeding $740 billion in a decade. This fuels economic growth and increases Australia’s attractiveness to global investors.
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Australia actively promotes trade through 17 free trade agreements (FTAs), including the Asia-Pacific Regional Comprehensive Economic Partnership (RCEP). These agreements increase trade and investment, supporting economic expansion and enhancing Australia’s global standing. Recent agreements with India and the upcoming UK FTA further expand trade and investment horizons.
A Growing Economy that Outperforms in Global Rankings
Despite the uncertainties of COVID-19, Australia’s economy remains resilient. It achieved growth of 5.2% in 2021, ranking 12th in the world. In 2022, Australia continued to outperform other advanced economies with a growth rate of 3.7%. This compares with an estimated 2.7% for advanced economies. And this success is likely to continue, with growth of 1.6% expected in 2023, compared to an average of 1.3% for advanced economies.
Built on strong fundamentals such as transparent governance, Australia excels in property rights and has a business-friendly environment with low taxes. Its high median wealth and affluent households attract high-net-worth individuals, supporting consumer markets and investment.
With a $7.3 trillion financial sector, including a large pool of superannuation assets, Australia appeals to foreign investors. Its economic strength and wealth indicators position it as a promising investment hub.
Low-tax Country
Australia has one of the world’s lowest tax rates for high-income countries, with tax revenues accounting for 29% of GDP, compared to the OECD average of 34%. Social security taxes in Australia are less than 1% of GDP, while the OECD average for its 38 member countries is 9%. In addition, taxes on goods and services contribute 7% to Australia’s GDP, compared to the OECD average of 11%.
Renewable Energy Investment Magnet
Australia secured third place as an appealing foreign direct investment (FDI) destination for renewable energy in 2022, states a recent fDi Intelligence report. The UK leads the ranking, with Egypt following.
Australia’s strong ranking is attributed to its significant green hydrogen initiatives. It stood third globally in attracting green hydrogen investments, boasting 100+ projects in 2022—double the previous year. Importantly, Australia’s green hydrogen project pipeline’s value surged from $165 billion in 2021 to $216 billion in 2022, encompassing approximately 40% of all globally announced hydrogen projects.
Noteworthy in the green hydrogen sector are South Korea’s POSCO, which invested $28 billion, a Japanese consortium committing $1.66 billion to the hydrogen energy supply chain, and Spain’s Iberdrola, which collaborated with ABEL Energy to set up a green hydrogen and methanol production facility in Tasmania.
Australia is also prominently featured in the top 10 FDI destinations for wind, solar, and battery investments in the FDI report. French renewable energy leader Neoen, for instance, constructed its fifth large-scale battery in South Australia as part of its $2.2 billion investment in Australian renewables since 2012. With 17 substantial renewable energy projects operational or ongoing, Australia constitutes about 35 to 40% of Neoen’s global installed capacity.
