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S'pore to see largest rise in number of ultra-rich

The next 10 years will see the Republic secure top 10 global ranking among countries with biggest ultra-rich population: Knight Frank
Friday, March 6, 2015 - 05:50
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Singapore is expected to see the largest increase in ultra-rich individuals compared to other cities globally over the next 10 years, according to Knight Frank's Wealth Report 2015.

Singapore

SINGAPORE is expected to see the largest increase in ultra-rich individuals compared to other cities globally over the next 10 years, according to Knight Frank's Wealth Report 2015.

This is set to thrust Singapore into the top 10 league of countries with the largest population of ultra-high net worth individuals (UHNWIs), whom the report defines as those with assets of US$30 million or more, excluding their principal residences.

"The strong growth of UHNWIs in Singapore is testament of Singapore's long-time fundamentals and stability as a global financial hub and wealth management centre," said Knight Frank Singapore head of research and consultancy Alice Tan.

Singapore has seen strong migration of HNWIs from China, India and Indonesia, according to the report. "This will have extensive downstream impact on property especially for high-end residential and commercial sector," Ms Tan added.

Based on proprietary data from WealthInsight on the super-rich in 108 cities across 97 countries, the report says that around 15 people joined the ranks of these ultra-rich each day in 2014.

This growth is set to continue in the next decade with the global super-rich population expected to increase 34 per cent to almost 231,000. About 10 per cent of the growth in UHNWIs will take place in just five cities - Singapore, Hong Kong, New York, London and Mumbai.

Globally, 53 new billionaires were minted last year alone. The total number of billionaires in the world now stands at 1,844, a 82 per cent increase from 10 years ago. Singapore is ranked ninth in 2014 among global cities given its billionaire population of 24.

WealthInsight estimates that the UHNWIs in Singapore will increase by 54.3 per cent or 1,752 individuals - the highest number among cities globally - to 4,979 by 2024. This would place Singapore at ninth among countries in terms of UHNWI population size, up from 13th globally.

Over the next 10 years, the top 15 cities with the fastest growth in UHNWI population will be in Asia, led by Ho Chi Minh City and dominated by Indian and Chinese cities.

Given the sheer size of China and its growing wealth, it is expected to see a 87.4 per cent jump in the number of ultra-rich residing in the country to 15,681 by 2024. This would bring it to third place among countries with the largest UHNWI population, up from fifth place currently. The US and Japan are expected to maintain their first and second places respectively in 2024.

Despite headwinds facing the global economy, several countries still experienced particularly strong wealth creation last year.

Some 1,419 people crossed the US$30 million mark in Asia last year, after an increase of fewer than 1,000 in 2013, according to WealthInsight's data. Asia's ultra-wealthy now hold more in total wealth with net assets of US$5.9 trillion - 7 per cent more than those in North America. With a US$6.4 trillion treasure chest, European UHNWIs still control the most wealth.

With Asia's staggering growth in the ultra-wealthy, it is expected to overtake North America in the next 10 years in UHNWI population.

Nicholas Holt, Knight Frank head of research for Asia Pacific, noted that Asia's growth in wealth is certainly impacting prime residential markets across Asia and Australasia, with the region's key cities and second home destinations seeing strong price growth over the last five years. "This is despite interventions by policy makers in a number of markets, designed to slow price growth and curb foreign ownership," he said.

Over the years, the ultra-rich investors are also looking to diversify their property portfolios and exploring new asset classes and locations, he added.

Knight Frank noted that property remains as a mainstream investment class, accounting on average for 32 per cent of an UHNWI's investment portfolio.

In its "attitudes" survey conducted on almost 500 leading private bankers and wealth advisers across the globe, 37 per cent of the respondents said their clients increased their exposure to property investments last year and 35 per cent expect the trend to continue this year. UHNWIs still hold most of their property investments in their own country, but they have been increasing the amount they invest overseas.

Some 80 per cent of wealth advisers expect their clients' net worth to increase this year. Outside of property, equities are predicted to be the most popular investment class in 2015, with a net balance of 45 per cent of respondents expecting their clients' exposure to stocks and shares to increase this year.

The so-called "investments of passion", such as art, wine and classic cars, continue to attract more interest. Over 60 per cent of survey respondents reckon that their clients are becoming more interested in these collectibles.

London still tops the list of "top 10 most important cities to UHNWIs" where the wealthy prefer to live, work, invest, get educated and spend their leisure time. This is followed by New York. But Knight Frank expects the two cities to swop places by 2025.

Singapore lost its third place on the list to regional rival Hong Kong and became fourth.

Mr Holt felt that the jury is still out on this duel between Hong Kong - with its close economic affinity to China and the sheer weight of Chinese capital at its doorstep - and Singapore - with its larger ultra-rich population and strategic position as a South-east Asian hub.

Ms Tan noted, however, that given Singapore's softening growth and intense competition from the other cities as a destination for the ultra- wealthy, it "needs to do more to maintain its position as one of the most favoured destinations".