Momentum in the oil and gas sector has led to a dramatic increase in the number of millionaires in Texas, with the city of Dallas seeing the fastest growth in the US, according to new research.
The first Capgemini/RBC United States Wealth Report found that millionaire growth in the region was driven primarily by investment in new technology, particularly in the state's two largest cities, Dallas and Houston.
According to the report, Dallas, the oil-rich city that helped pioneer the controversial fracking technology, has seen a 20% growth in its high net worth population between 2012 and 2013, and the total number of millionaires now sits at 113,000.
Houston, the second largest city in the state, has seen similar levels of growth and has added 20,000 new millionaires during the aforementioned period. There are now 131,000 millionaires in the city.
Between Dallas and Houston, the high net worth population controls $953 billion (€748 billion) in wealth, which is expected to exceed $1 trillion by 2015.
Darryl Traweek, senior vice president and for RBC Wealth Management, said that millionaire growth in Texas has been assisted by economic stability in the region, brought about by the high number of jobs in the lucrative energy sector.
“Dallas and Houston's increasingly diversified economic base means that the state offers broader options, making the cities more economically stable than some of their peers. Thanks to this, Houston and Dallas saw strong growth both the number of high net worth individuals and their wealth,” he said.
The total number of millionaires in America grew by 600,000 between 2012 and 2013, according to the report. Nearly half of those came from Texas, which is nicknamed the Lone Star State, as it was formerly a republic.
The study is based on the analysis of 12 large American cities, which RBC and Capgemini ranked in descending order by number of millionaires: New York, Los Angeles, Chicago, Washington, San Francisco, Boston, Philadelphia, Houston, San Jose, Dallas, Detroit and Seattle.
Detroit was singled out as the worst performer of the 12 cities, as the most populous city in Michigan struggled with a declining population and high unemployment. Last year the city declared bankruptcy. According to Traweek, Detroit had the lowest gross metropolitan product growth, but was still able to grow high net worth wealth by a respectable 15%.
The number of millionaires in New York increased by 12% from 2012 to 2013, suggesting that the economy is slowly shifting away from the financial capital and towards the country's energy belt.
Bill Sullivan, global head of market intelligence at Capgemini Financial Services, said cities that saw the largest increases in millionaire numbers had growing real estate values, improving economies, and strength in certain sectors such as energy and technology.