ASIA CLOSING IN ON U.S. AS KEY HUB FOR UHNWIs BY 2026, SAYS KNIGHT FRANK WEALTH REPORT
BY Chris Prasad
Global real estate firm Knight Frank has just released the 11th edition of The Wealth Report, and the results are revealing as well as more than a little surprising.
For example, The Wealth Report 2017 reveals that while global economic turmoil continues to stifle growth across many market sectors, the number of Ultra-High-Net-Worth Individuals (UHNWIs) is back on the rise – albeit at a lower margin than in previous “positive” years. Now, UHNWIs are on a 4% rise (with a total of 193,490 UHNWIs) globally.
More telling is the fact that UHNWI growth will principally be driven by Asia, where after a short period of flat growth, it is now on an 8% incline. This is in contrast to the situation in Europe and in North America where growth has been negative or flat.
Knight Frank Asia Pacific’s head of research, Nicholas Holt, explains that this is indicative of the shift of economic influence from the West to Asia. By 2026, the number of UHNWIs in Asia (defined as those with nett worth of over US$30 million, excluding their primary residence) is expected to grow by about 70%.
Holt also explained that the main engine for this shift is the continued emergence of China as a key global economic power. The growth in Chinese wealth also impacts property markets within the region and beyond, as real estate is among the core assets that are accumulated by the wealthy.
However, UHNWI growth is not isolated to China, as across the region the number of ultra-wealthy individuals is on the rise.
Here at home, Malaysia has seen a 3% upswing in the number of UHNWIs, and Knight Frank’s projection is that we could see as much as 70% growth in the next 10 years or so. About 62% of Malaysia’s UHNWIs are located in Kuala Lumpur.
Managing director of Knight Frank Malaysia Sarkunan Subramaniam notes there is a unique distinction among Malaysia’s brand of UHNWIs.
“Malaysia’s millionaires are mostly baby boomers, while China and India have a large amount of millionaires among the Gen X, which are expected to grow in the next few years. While North America tops the chart with highest number of millionaires, Asia is forecast to rise by 71% over the next decade,” he said.
Overall, Knight Frank projects that the Asian wealth growth could see it closing in on the United States as the key hub for UHNWIs by 2026.
This fact is expected positively impact property markets within the region and beyond as Asia’s UHNWIs will be looking to diversify their investment portfolio to preserve their wealth.
Already, Australia has been a huge beneficiary according to The Wealth Report’s look at wealth trends, as the country’s cities have seen the highest nett inflows of HNWIs (those with a nett-worth exceeding US$1 million) globally.
The report’s 2017 Attitudes Survey reveals that wealth preservation and education are high on the agenda for UHNWIs, which is why Australia’s robust property market and conveniently accessed education sector have benefitted greatly from Asian attention.
Additionally, Singapore ranked the second most likely market for Asian UHNWIs to own overseas property, after the traditional favourite, the United Kingdom. It was also ranked as the top destination for Asian UHNWIs looking to invest in commercial property, moderately ahead of the UK and the US.
From the Malaysian perspective, Singapore’s projected lustre could potentially provide a positive spillover effect for the neighbouring Iskandar Malaysia development region as well as KL itself via the upcoming high-speed rail project.