Volatility knocks 6,000 out of ultra-rich club

Singapore

AMID the global macro-economic volatility last year, almost 6,000 people dropped out of the ultra-high net worth individuals (UHNWI) wealth bracket - a 3 per cent slide and the first annual dip since the 2008 financial crisis.

Knight Frank's Wealth Report 2016 defines UHNWIs as those with US$30 million in assets or more, excluding their primary residence.

Asia has topped the absolute increase in UHNWI population in the last 10 years, and is expected to continue to do so for the next 10 years, thanks to the anticipated surge in China's and India's ultra-rich.

There are now about 187,500 UHNWIs globally, and by 2025, this could rise by 41 per cent to 263,500. That said, the growth would be significantly slower compared to the previous 10 years.

Singapore was the second top Asian city with the most number of UHNWIs, coming after Hong Kong which still leads with 3,854 UHNWIs.

Singapore's UHNWI population dipped 8 per cent from 2,565 in 2014 to 2,360 in 2015.

Globally, Singapore is sixth, and Hong Kong third, coming after New York (first) and London (second).

Of the 19 countries tracked within Asia Pacific, 12 saw their UHNWI population fall in 2015.

Nicholas Holt, Knight Frank's research head for Asia Pacific, said this was a result of global macro-economic events, including China's economic slowdown, falling crude oil prices, volatile equity markets and the strengthening of the US dollar.

"Looking at a longer time horizon however, Asia especially has been fertile ground for the growth in the number of UHNWIs, with more individuals surpassing the US$30 million barrier than in any other region over the last ten years," he said.

Much of this newfound wealth in Asia has had an impact on the age profile of Asia's ultra-rich, he added.

For instance, the average age of those with US$10 million or more in net assets in China is 52 years old, a full decade younger than their Swiss counterparts who average 62.

In fact, multimillionaires in developed economies such as the UK and Switzerland are likely to be older - in their mid to late 50s or 60s - while developing economies (Vietnam, China, Brazil) tend to have younger multimillionaires, the report found.

As for rankings of the most important cities to UHNWIs, Singapore moved up one spot to third place, right after London (first place) and New York (second place) respectively. Hong Kong was fourth.

The report ranks the cities that matter most to the world's wealthy, based on where they live, invest, educate their children, grow their businesses, network and spend their leisure time. On all measures, year-in year-out, London and New York have vied for the two top slots over the past decade. No other city comes close in terms of their appeal.

Singapore, Hong Kong, Shanghai and Dubai have also repeated their competition for positions three to six.When asked if New York or London could ever be overtaken in the coming decade, about half of survey respondents said no.

Of the one-third of respondents who said yes, Singapore, followed by Dubai, are the top contenders to be the next most important city to UHNWIs in the next 10 years.

In Singapore, its appeal could be improving, and demand recovering now after prime residential property prices fell 2.1 per cent in 2015, the report said. Tay Kah Poh, executive director and head of residential for Knight Frank Singapore, said: "Singapore luxury property prices have dropped for several years now, and while the reasons for the fall are still in place - overall slowing economy, volatile financial markets, rising rates and government cooling measures - fundamental value is clearly emerging."

There could be a "robust rebound" in the Singapore luxury property market when macro-economic conditions turn for the better and/or the government reverses some of the cooling measures, he added.

This year's survey is based on the views of about 400 private bankers and wealth advisers globally who manage assets for about 45,000 UHNWIs with a combined wealth of over half a trillion US dollars.