Wealth in Asia at all time high Published: 16.10.2017
The spotlight is on Asia-Pacific as the region leads the way in wealth growth globally while many of the legacy markets are experiencing smaller (or static) growth. In Capgemini’s 2015 Asia-Pacific Wealth Report, the Asia-Pacific region was recorded as having the highest High Net Worth Individual (HNWI) population in the world, and one year on continues to lead with the most HNWI wealth and a growth rate 5.8 times more than the rest of the world. Fast forward to today and regional wealth is at an all time high.
Forbes hit a record with the number of billionaires in the Forbes 2017 Billionaires List up 13% from 2016 – a total of 2,043 people whose total net worth rose by 18% – but what stands out in the Forbes list is the rate of wealth growth in Asia. Of the 195 newcomers to the Forbes 2017 Billionaires List worldwide, 76 were from Mainland China –almost 40% of the total – while of the 15 new self-made women that joined the list, all but one were from Asia-Pacific. Mainland China sits top of the Asian billionaire rankings by number, followed by India and Hong Kong, with Taiwan, Japan, South Korea, Singapore, Thailand, Malaysia, Indonesia, Philippines and Vietnam, trailing in that order.
Most common sources of wealth around the world include real estate and equities, asset classes that are not easily or quickly divested, and this is also partly true for Asia. For example, according to the Hurun Report Chinese Luxury Consumer Survey 2017 – a survey of 449 mainland Chinese millionaires (individuals with a personal wealth equivalent of USD 1.4 million) – real estate has overtaken stocks as the most popular investment amongst Chinese millionaires. However, according to Capgemini’s 2016 Asia-Pacific Wealth Report 20.6% of all wealth in the region is held as “Cash and Cash Equivalents”, thus is easily accessible, and less than one third of all HNWIs' wealth in the region is placed with wealth managers.
These cash resources in Asia give the superrich large discretionary purchasing power and has been the driver behind luxury goods sales in the region. International fashion/ accessory brands and jewellery are the traditional shopping items of Asia's wealthy elite, but as HNWIs and UHNWIs accumulate wealth, their tastes change. While Louis Vuitton is considered a top tier luxury brand to many, in China it has become a brand for secretaries as the uber wealthy seek out more discreet luxury brands that make them stand out from the crowd, rather than fit in.
Art, watches, cars and boats rank high amongst wealthy Asians today, as do experiences – Michelin dining, luxury travel and bespoke vacation experiences the kind of which “money can't buy”. While Asian tastes differ from those of Westerners, luxury brands and product manufacturers are realising the need to not only leverage their brand awareness and value, but also to deliver something unique – product or experience-wise – for Asian tastes.
As we near year 18 of the “Asian Century” the world's luxury brands have Asia in their sights. Expect Asia to become their priority as regional wealth continues to trend upwards.