Expert View: Who wants to be a millionaire? They're 10 a penny

The cheapest bar of soap I found in Harvey Nichols last week was £13
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The Independent Online

The stress of the past few weeks on the markets was starting to get to me, and I decided it was time for a well-earnt weekend in the sun. Little did I realise that the next 24 hours of frenzied emails and phone calls would fail to yield any hotel even close to the description of "luxury" at an affordable price - even on a City salary.

A favourite European hotspot, where I'd stayed 10 years ago for £200 a night, was selling last Saturday for a princely €1,200 (£810). While general inflation remains subdued, the world of luxury is experiencing galloping inflation from the top down.

The peak of the global pyramid has never had it so good: to secure an entry in Fortune magazine's list of the richest 400 Americans this year, you had to be a billionaire.

The antics of billionaires fill the papers: steel magnate Lakshmi Mittal apparently spent £30m on his daughter Vanisha's wedding. Meanwhile, big yachts are back on a scale not seen since the 1920s - and, for the rich businessmen of the 21st century, one is not enough: Paul Allen (of Microsoft) has three, as does Roman Abramovich - 400ft liners with helicopter pads.

This is top-of-the-pyramid stuff, but just as interesting is the scale of the riches further down. There are now seven million households in the world with liquid assets in excess of $1m (£533,000). Given that most people continue to have most of their wealth in property, the true number of millionaires on this planet must be a multiple of that. The rich are suddenly something of a mass market.

The UK reflects this global trend. There are now nearly half a million liquid millionaires, and an additional 480,000 who enjoy at least a six-figure income. The most noticeable effect of this is the never-ending rise in house prices, which, certainly in the current market, is being led by the top end. In London's "golden triangle" (bounded by the three points of Piccadilly, Kensington and Chelsea) prices of £1,000 a square foot are common, and £2,000 achievable for premium developments such as new builds in Knightsbridge.

The property-price boom on quality street spills over into goods and services. Restaurant inflation bears no relation to the retail price index in central London. If you live there, a trip to almost any other city in the world is a cost-saving exercise. The retail outlets on Chelsea's Sloane Street sell factory-made goods with four-figure price tags. I went into Harvey Nichols in Knightsbridge last week stupidly thinking I could buy a bar of soap, and was astonished to find the cheapest one was £13.

While the rise of the rich has been powered by the financial fortunes of New York and London, it is also being driven by the Asia effect. The number of Indian and South Korean millionaires surged by a remarkable 20 per cent last year. Across Asia there are now 2.4 million of them, with a growth rate of around 3,000 a week.

For the wealth-management industry this is turning into a bonanza, as testified by some of the recent staff-poaching spats. UBS has quadrupled the number of private bankers it employs in just six years, and Citigroup recently opened a private banking office in Shanghai. All this is not surprising, with a total target market valued at $7.6 trillion.

Similarly, for investors, luxury goods simply must be a long-term buy. By 2011, 40 per cent of demand for these products will come from China.

As I lay by the miniscule pool in my mediocre hotel, attempting to recover from a night sleeping in a broom cupboard, my companion turned to me and asked: "Are you coming to the millionaire fair in Cannes?"


"It's thousands of people looking at rich boys' toys. This year they've got a mobile phone costing a million."

I turned over and went to sleep.