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News from Knight Frank Hong Kong

Knight Frank launches The Wealth Report 2017 (11th edition)

02 March 2017

 Knight Frank, the independent global property consultancy hosted a press conference this afternoon in Hong Kong for the launch of The Wealth Report 2017. Now in its 11th year, the report tracks the growing super-rich population in 125 cities across 89 countries. 

 
  • Asia tops the absolute increase in UHNWI population among world regions, both in the last 10 years and in the next 10 years. 
  • China ranks 2nd in the world in terms of absolute increase in UHNWI population over the next 10 years.
  • Of the 89 cities surveyed, Hong Kong tops UHNWI population in Asia with 4,080 UHNWIs in 2016, increased by 230 year-on-year. The city comes third in the world in 2016, after New York City and London. 
  • The UHNWIs in Hong Kong owns 3.3 homes on average.
  • Asian billionaires will double over the next decade.
  • China tops the largest billionaire population in Asia in 2016.
  • China’s cities have catapulted themselves up the rankings of annual growth rate of luxury flat prices with Shanghai, Beijing and Guangzhou claiming the top three slots, all exceeding 26% year-on-year growth. 
  • Hong Kong’s luxury homes remain the second most expensive in the world. 
  • Hong Kong ranks third overall in the Knight Frank City Wealth Index 2017, which identify which cities that matter to the wealthy.
  • Shanghai expects to see strongest growth in prime residential flat prices in 2017.
 
Wealth distribution 
The Wealth Report 2017 (Page 13)
 
Highlights of Ultra-High-Net-Worth Individual (UHNWI) population:
  • Wealth creation gathered some momentum during 2016, resulting in a modest rise in the global population of ultra-wealthy people and reversing last year’s decline. The number of individuals with US$30 million or more in net assets, defined as UHNWIs, rose by 6,340 in 2016, boosting the total ultra-wealthy population to 193,490.
  • By 2026, the global population of UHNWIs is set to rise by 43% to 275,740, which is led by a forecast 91% growth in Asia in the next decade.  
  • Nicholas Holt, Head of Research for Asia Pacific, Knight Frank Asia Pacific, says, “The data show a very dynamic wealth landscape around the world with the Asian region taking on the leading role in terms of growth of wealthy individuals over the next 10 years. In percentage terms, emerging Asian markets such as Vietnam will lead the way, although the true story behind Asia catching up with North America can be found when looking at China and India – the Asian behemoths will witness the second and third largest number of additions to the ranks of UHNWIs respectively over the next decade – behind only that of the US.”
  • In China, despite indications that economic growth is slowing, the sheer scale of the economy, coupled with strong growth in the local high-tech, media, entertainment and healthcare sectors, will deliver 140% growth in ultrawealthy populations from 14,310 to 34,340 in the next 10 years, New World Wealth forecasts.
  • In 2016, 5.585 people out of 10,000 in Hong Kong are UHNWIs. The number of UHNWIs grew from 3,850 in 2015 to 4,080 in 2016, up 5.97% year-on-year. The growth of Hong Kong UHNWI population is set to continue in the coming decade. It is expected to climb by 40% from 4,080 to 5,710 in 2026.  
  • The UHNWIs in Hong Kong owns 3.3 homes on average, compared with 4.3 in Saudi Arabia, 4 in Taiwan, and 3.2 in Singapore. 
  • China and India are ranked 2nd and 3rd in the world in terms of absolute increase in UHNWI population over the next 10 years. 
 
Billionaire population 
 
Highlights of billionaire population:
 
  • For billionaire population, a 100% surge in the number of Asian billionaires is forecasted over the next decade, bringing the figure to a total of 1,127. This will exceed that North America, where the billionaire population by then will be 893. 
  • The total number of billionaires in the world now reaches 2,024, which is a 45% increase from 10 years ago. China, with 204 billionaires, tops the largest billionaire population in Asia. In Hong Kong, there were 51 billionaires in 2016, up from 48 in a year.
 
The Knight Frank City Wealth Index
Source: The Wealth Report 2017, Page 22
 
Cities that matters to the wealthy
 
  • The Knight Frank City Wealth Index uses four critical measures, including current wealth, investment, connectivity and future wealth, to identify the cities that matter to the wealthy. 
  • On all measures, London and New York have vied for the two top slots. No other city comes close in terms of their breadth and depth of appeal. 
  • Hong Kong ranked third overall in the index, followed by Shanghai on the fourth position, Singapore on the sixth and Beijing on the eighth place. 
  • Although Hong Kong and San Francisco are the third and fourth largest concentrations of current wealth today, these two cities are likely to be eclipsed by the rising fortunes of Singapore, Shanghai and Beijing, which are all expected to see their wealthy populations grow rapidly over the next decade.
 
Nicholas Holt, Head of Research for Asia Pacific, Knight Frank Asia Pacific, says, “The prominence of Asian cities in the top 10 of the City Wealth Index demonstrates the increasing global significance of the region’s urban centres. Greater China is strongly represented with three of the top ten cities, second only behind the US which accounts for four. Looking forward, with wealth concentrations set to increase in the key Asian hubs, we are likely to see them increasingly compete with London and New York at the top of the table.”
 
Notes to editors: Methodology 
 
The City Wealth Index uses four critical measures to identify the cities that matter to the wealthy:
  • Current wealth – the current population of UHNWIs.
  • Investment – the total amount, in US$, of private investment in property during 2016, weighted in favour of those markets with a high proportion of cross-border inbound investment. 
  • Connectivity – the number of inbound and outbound first and business class flights in 2016. 
  • Future wealth – a forecast of each city’s UHNWI population in 2026, weighted in accordance with the findings of our Attitudes Survey. 
 
Prime Residential Property

Prime International Residential Index (PIRI)
Source: The Wealth Report 2017, Page 30
 
This year, the PIRI tracks the value of luxury homes in 100 key locations worldwide. The index highlights the many factors playing out around the world that affect prime property markets.  
 
Overall PIRI performance: 
 
  • The value of the world’s leading prime residential markets recorded slower growth in 2016, rose on average by 1.4% last year, compared with 1.8% in 2015. 
  • Of the 100 locations tracked by PIRI, 61% recorded flat or rising prices in 2016, down from 66% the year before. Nine locations recorded double-digit growth.
  • China’s cities have catapulted themselves up the rankings with Shanghai, Beijing and Guangzhou claiming the top three slots, all exceeding 26% year-on-year growth. Another Asian city Seoul came fourth, with a 16.61% annual price growth in 2016. 
  • Hong Kong, which has languished in the bottom half of the PIRI rankings since 2014, has started to drift upwards to rank 38 in the index, recording annual growth of 2.1% in 2016. The increase would be higher were it not for the extension of a 15% rate of stamp duty.
  • David Ji, Director and Head of Research & Consultancy, Greater China, says: “Given Hong Kong’s currency peg to the US dollar, some further relief on Hong Kong’s house price may be proffered by the Federal Reserve if it restarts its rate-lifting campaign in 2017. However, it will have to go some way to counter the demand from buyers in this market, eager to hold tangible asset in this relatively stable and mature market.”  
  • The two other Asian cities which saw higher increase in luxury flat prices last year are Singapore (ranked 23, 3.4%) and Mumbai (ranked 30, 2.9%). 

Hong Kong’s luxury homes remain the second most expensive in the world
Source: The Wealth Report 2017, Page 33
 
Monaco - for the 10th consecutive year – is confirmed as the most expensive city to buy luxury residential property, with US$1m buying just 17 square metres of accommodation. Not far behind, are Hong Kong and New York occupying second and third. US$1m would buy 20 and 26 square metres, respectively. 
 
  • Looking forward, Shanghai is expected to see strongest growth in prime residential flat prices of 8% on average year-on-year in 2017, while the price of luxury residential flats in Hong Kong will remain flat this year.
 
Commercial Property
Source: The Wealth Report 2017, P40-43
 
Knight Frank’s capital markets experts look at the key trends of the past decade, future opportunities for private investors and landmark deals in their market.
 
  • Private investors have been key players in the global market for some time now, accounting for 20-25% of all transaction volumes over the last 10 years, but this rose to nearly 30% in 2016.
  • Looking ahead, investors are understandably cautious given weak global economic forecasts and the expectation of further geopolitical uncertainty. But despite this, significant appetite for the market remains. 
  • According to The Wealth Report Attitude Survey, the majority of private property investors favoured investment in Europe, with the UK and Germany the most popular individual countries. The reasons for this included the scale of the market, relative liquidity and the depth of opportunities available.
  • China and Hong Kong are the only Asian locations on the top 10 list, with China on the ninth position followed by Hong Kong. 
 
Notes to editors:
 
UHNWI: Defined as someone with a net worth of US$30m or more, excluding their principal residence.
 
To download the report, please visit: