Ultra-rich on rise; Asia most positive on wealth prospects

The number of ultra-wealthy individuals worldwide climbed 7% last year despite economic turbulence, while Asia-Pacific HNWIs are most optimistic about future prospects, a new study finds.

There are now 63,000 centa-millionaires with $100 million or more in disposable assets, a 29% increase since 2006, according to the Wealth Report 2012 set to be disseminated by Citi Private Bank and property firm Knight Frank today. This is forecast to rise 37% to 86,000 by 2016.

While the global figure rose 7%, that included a 6% increase for North America (to 17,000) and no change for Latin America (5,000).

The data does point to a shifting emphasis to the East. There are now 18,000 centa-millionaires in Southeast Asia, China and Japan, above both North America and Western Europe (14,000).

On a country-by-country basis, the US will still dominate by 2016 with 17,100 centa-millionaires, but China will be catching up fast with its numbers forecast to double to 14,000 over the same period.

Moreover, Southeast Asian deca-millionaires (with $10 million or more in assets) already outnumber those in Europe and are expected to overtake those in the US within the next decade.

“We believe the number and concentration of centa-millionaires accentuates the trajectory of current global wealth flows,” says James Lawson, director at Ledbury Research. “Trends seen in this wealth bracket are likely to be replicated in lower wealth tiers in years to come.”

Citi has forecast that the North American and Western European share of world real GDP will fall from 41% in 2010 to just 18% in 2050. Over the same period, developing Asia’s share is expected to rise from 27% to 49%.

Meanwhile, an Attitudes Survey for 2011 carried out by Citi Private Bank wealth advisers found high-net-worth investors in Asia-Pacific were the most optimistic about their future wealth prospects: 39% were optimistic – more than any other region – while 3% were very optimistic. 

The most pessimistic HNWIs could be found in Europe & Russia (36%) and Latin America (27%).

In terms of what HNWIs view as the biggest threat to wealth creation, the overwhelming favourite was global economic factors, which achieved 100% in North America and was the top response across the board. It was followed by local economic factors (61% on average), local political instability (54%) and global political instability (52%).

More high-net-worth investors in Africa and the Middle East (60%) and Asia-Pacific (59%) put capital growth as their chief strategic aim when investing in property, against an average of 51%. For Asia-Pacific, the aims of wealth preservation (34%) and performance stability (28%) fell below average.

For traditional and alternative investments, Asia-Pacific respondents still put property top (31%), followed by equities (24%) – the highest percentages globally in both categories. Cash (19%) and bonds (16%) came next, while currencies made up 4% and gold and commodities 2% each.

In terms of asset allocation, there was no net change towards property among Asia-Pacific HNWIs, but there was a dramatic -76% net swing out of equities in 2011. This was counterbalanced by a +67% swing into bonds, +52% into cash and +45% into gold.

Interestingly, more HNWIs in Asia-Pacific than anywhere else expressed increased interest in wine as an alternative asset class (29%, against an average of 11%), while 32% showed increased interest in fine art/collectibles, bettered only by North American HNWIs (53%).

Renewable energy scored most highly in Latin America (44%, against an average of 24%), as did venture capital (46%, against an average of 1%).

Asked how they planned to pass on wealth, 42% of Asia-Pacific HNWIs said it would be handed over gradually to successors over their lifetime (against an average of 25%). Tellingly, in North America some 95% said it would be via a will or succession plan, against a 70% average and 52% in Asia-Pacific (which was the lowest globally).