20% of rich see value of assets halved

Nearly 20% of Ireland’s wealthy people have seen the value of their assets halved as a result of their over-reliance on property.

Ireland’s richest people still have the majority of their wealth stored in property, according to a survey by Barclays bank.

The survey of 2,000 individuals who had a net worth of £1m (€1.16m) and 200 individuals with a net worth valued at more than £10m found that despite the downturn in the economy the rich in Ireland remain more attached to property than their European counterparts.

Unsurprisingly, considering their exposure to the property bubble, the wealthy in Ireland have seen a huge fall in their net worth during the financial crisis.

The rich in Ireland are still likely to hold 55% of their wealth in property which is higher than any other nationality. Ireland’s wealthy are more likely to stow their money in tangible assets and collectibles (7%), than in business or entrepreneurial activities (2%).

Although it is not an effective method for maintaining wealth, cash remains more popular (18%) than investments (16%).

Head of wealth and investment management at Barclays Bank Ireland, Pat McCormack, said that high net worth individuals (HNWIs) in Ireland should look to balance their portfolios.

“The study confirms that when it comes to asset allocation, Irish HNWIs, like so many other Irish investors, continue to hold a very high proportion of their wealth in property and are underweighted when it comes to equities and other investments. The 16% of wealth held in financial investments in Ireland is half the European average of 32% and significantly lower than the US average where HNWI hold 61% of their wealth in these types of investments. As market conditions improve, there is more of a case for Irish investors to take the opportunity to reweight their portfolios.”

Only 38% of respondents managed to navigate the crisis without any impact on their wealth.

Passing wealth on to future generations remains a high priority, with a third of respondents planning to give all of their wealth as inheritence, one of the highest proportions globally.

“We see strong differences in how wealthy individuals around the world use their wealth to help the next generation. Those who have made their money through business in more developed markets would prefer the next generation to carve out their own path, rather than disrupt the entrepreneurial cycle and discourage the entrepreneurial spirit by simply having wealth handed down to them,” said Mr McCormack.