Wealth distribution
The Wealth Report 2019 (Page 13)
Ultra-wealthy population (those with net assets of US$30 million or more)
· The number of ultra-wealthy people is predicted to increase by 22% in the five years to 2023, taking the global population to nearly 250,000.
· Asian markets will see the third biggest growth in UHNWIs over the next five years (2018-2023). India leads with 39% growth, followed by the Philippines (38%) and the Chinese Mainland (35%). Of the 59 markets in Knight Frank’s forecasts, eight of the top ten markets ranked by future growth are in Asia. However, it is worth noting that some of these markets are starting from a low base, for example, the Philippines is forecast to have 296 UHNWIs by 2023, a number that is less than 2% of the ultra-wealthy population of Japan (20,570).
· In 2018, Japan leads in Asia with 18,534 ultra-wealthy individuals, follow by 9,953 on the Chinese Mainland, 3,598 in Singapore, and 3,010 in Hong Kong.
Nicholas Holt, Head of Research, Knight Frank Asia Pacific, says, “Despite softening momentum in the region’s economies, growth prospects in Asia remain favourable in the medium term. While China’s economy is expected to slow, emerging markets such as India and the Philippines will deliver some of the strongest growth over the coming years.”
Though the forecast for long-term wealth creation remains positive, UHNWIs in Asia-Pacific are less optimistic about growing their wealth in 2019, according to the Attitudes Survey. Against the prospect of continued higher interest rates and with the ongoing Sino-US trade dispute, wealth advisors in Asia (excluding Australia and New Zealand) were among the least optimistic globally about their clients’ ability to create wealth in 2019.
“The uncertainty around US-China trade tensions, a Chinese economic slowdown and Brexit have all dampened regional sentiment for the next twelve months. While a deterioration in any of these situations could further impact sentiment, Asia remains one of the key growth engines of the world economy,” says Holt.
Thomas Lam, Executive Director and Head of Valuation & Advisory says, “Despite the continued cooling measures in the property market, the supply of super luxury homes in Hong Kong remains limited and the super luxury prices continue to increase, surpassing the growth rate of mass residential prices. In Hong Kong, US$1 million would buy 22 square metres of prime property. At the same time, according to Knight Frank's Wealth Report, the number of Hong Kong's UHNWI’s rose by 22% between 2013 and 2018, the population is projected to rise by 27% over the next five years from 2018 to 2023. All of the above factors support Hong Kong's major transactions on the rise. The increase in trading volume was the most significant increase in transactions with property prices exceeding HK$100 million. In 2018, the number of such transactions increased by over 30% year on year.”
Regional Wealth Distribution
Region
|
Ultra-wealthy (US$30m+)
|
% change
|
2013
|
2017
|
2018
|
2023
|
2013 - 2018
|
2017 -2018
|
2018-2023
|
Africa
|
1,868
|
1,991
|
2,050
|
2,450
|
10%
|
3%
|
20%
|
Asia
|
40,853
|
46,661
|
48,245
|
59,116
|
18%
|
3%
|
23%
|
Australasia
|
3,828
|
4,230
|
4,400
|
5,360
|
15%
|
4%
|
22%
|
Europe
|
58,731
|
67,867
|
70,627
|
87,400
|
20%
|
4%
|
24%
|
Latin America
|
9,677
|
10,077
|
10,457
|
12,676
|
8%
|
4%
|
21%
|
Middle East
|
7,052
|
8,019
|
8,301
|
9,997
|
18%
|
4%
|
20%
|
North America
|
43,626
|
50,184
|
51,912
|
61,119
|
19%
|
3%
|
18%
|
Russia & CIS
|
2,034
|
2,222
|
2,350
|
2,935
|
16%
|
6%
|
25%
|
World
|
167,669
|
191,251
|
198,342
|
241,053
|
18%
|
4%
|
22%
|
Source: Globaldata Wealthinsight, the Wealth Report 2019 Page 86
Market level wealth distribution of ultra-wealthy (US$30m+) growth – Top 15 Markets ranked by growth over the next 5 years
|
Market
|
2013
|
2017
|
2018
|
2023
|
2013 -2018
|
2017-2018
|
2018-2023
|
1
|
India
|
1,576
|
1,827
|
1,947
|
2,697
|
24%
|
7%
|
39%
|
2
|
Philippines
|
171
|
204
|
215
|
296
|
26%
|
5%
|
38%
|
3
|
Chinese Mainland
|
7,905
|
9,487
|
9,953
|
13,429
|
26%
|
5%
|
35%
|
4
|
Indonesia
|
626
|
719
|
756
|
995
|
21%
|
5%
|
32%
|
5
|
Vietnam
|
110
|
135
|
142
|
186
|
29%
|
5%
|
31%
|
5
|
Malaysia
|
557
|
611
|
636
|
830
|
14%
|
4%
|
31%
|
7
|
South Korea
|
1,565
|
1,803
|
1,893
|
2,456
|
21%
|
5%
|
30%
|
8
|
Romania
|
172
|
204
|
215
|
278
|
25%
|
5%
|
29%
|
8
|
Thailand
|
527
|
600
|
631
|
814
|
20%
|
5%
|
29%
|
8
|
Poland
|
487
|
563
|
589
|
757
|
21%
|
5%
|
29%
|
11
|
Germany
|
11,392
|
13,401
|
14,047
|
17,854
|
23%
|
5%
|
27%
|
11
|
Hong Kong
|
2,469
|
2,880
|
3,010
|
3,821
|
22%
|
5%
|
27%
|
11
|
Spain
|
3,475
|
3,926
|
4,111
|
5,202
|
18%
|
5%
|
27%
|
14
|
New Zealand
|
1,050
|
1,235
|
1,292
|
1,629
|
23%
|
5%
|
26%
|
15
|
Taiwan
|
1,503
|
1,712
|
1,781
|
2,233
|
18%
|
4%
|
25%
|
Source: Globaldata Wealthinsight, the Wealth Report 2019 Page 86
Wealth distribution of ultra-wealthy (US$30m+) – Top 10 Markets in Asia
|
Markets
|
2018
|
2018-2023
|
1
|
Japan
|
18,534
|
11%
|
2
|
Chinese Mainland
|
9,953
|
35%
|
3
|
Singapore
|
3,598
|
22%
|
4
|
Hong Kong
|
3,010
|
27%
|
5
|
India
|
1,947
|
39%
|
6
|
South Korea
|
1,893
|
30%
|
7
|
Taiwan
|
1,781
|
25%
|
8
|
Indonesia
|
756
|
32%
|
9
|
Malaysia
|
636
|
31%
|
10
|
Thailand
|
631
|
29%
|
Source: Globaldata Wealthinsight, the Wealth Report 2019 Page 86
The Knight Frank City Wealth Index
Source: The Wealth Report 2019, Page 19
Cities that matters to the wealthy
- The Knight Frank City Wealth Index is built around three categories: wealth, investment and lifestyle.
- On all measures, London has topped the table in the 2018 City Wealth Index, London has topped the 2019 City Wealth Index, reclaiming the spot from New York, which dominated last year’s standings. New York slips to second and the top five is completed by Hong Kong, Singapore, Los Angeles. Hong Kong ranks 3rd overall in the index.
- Asia’s growing prominence is confirmed. Overall, the number of slots in our top 20 occupied by cities in the Asia-Pacific region rises to seven.
Knight Frank City Wealth Index 2019
Overall rank
|
City
|
Wealth
|
Investment
|
Lifestyle
|
1
|
London
|
1
|
2
|
1
|
2
|
New York
|
1
|
1
|
3
|
3
|
Hong Kong
|
3
|
3
|
4
|
4
|
Singapore
|
5
|
9
|
1
|
5
|
Los Angeles
|
13
|
3
|
13
|
6
|
Chicago
|
19
|
8
|
7
|
7
|
Shanghai
|
8
|
23
|
15
|
8
|
Sydney
|
27
|
6
|
16
|
9
|
Tokyo
|
28
|
19
|
5
|
10
|
Toronto
|
18
|
18
|
19
|
11
|
Paris
|
10
|
42
|
6
|
11
|
Berlin
|
34
|
12
|
12
|
11
|
Frankfurt
|
6
|
17
|
35
|
14
|
Beijing
|
3
|
37
|
20
|
14
|
Seoul
|
7
|
35
|
18
|
14
|
San Francisco
|
29
|
23
|
8
|
17
|
Munich
|
10
|
20
|
34
|
17
|
Washington
|
50
|
5
|
9
|
19
|
Atlanta
|
21
|
10
|
37
|
20
|
Amsterdam
|
48
|
14
|
10
|
Source: Knight Frank Research, Wealth Insights, RCA, Five Star Alliance, Michelin, Times Higher Education, The Economist
Attitudes Survey
Source: The Wealth Report 2019, Page 88
The 2019 Attitudes Survey is based on responses provided by 600 private bankers and wealth advisers who between them manage over US$3 trillion of wealth for UHNWI clients.
Current allocation to property
According to the Attitudes Survey, real estate makes up 23% of UHNWI portfolios in Asia, higher than the global average of 21%. When asked “what percentage of your clients’ total wealth is allocated to the properties they live in (first and second homes)?” Chinese Mainland ranked highest in Asia at 50%. Indonesia ranked lowest at 18%.
Liam Bailey, Global Head of Research at Knight Frank says, “We have noted in previous years a growing desire from UHNWIs to increase the share of their portfolios dedicated to property. This trend has been confirmed by the growth in the average number of homes owned by wealthy people globally, increasing from 2.9 to 3.6 over the past year.”
Market
|
Allocation of first and second homes in investment portfolio
|
Chinese Mainland
|
50%
|
South Korea
|
47%
|
Hong Kong
|
43%
|
Philippines
|
40%
|
Taiwan
|
38%
|
Malaysia
|
37%
|
India
|
29%
|
Singapore
|
29%
|
Indonesia
|
18%
|
Source: The Wealth Report Attitudes Survey 2019
The number of first and second homes
Market
|
The number of first and second homes on average
|
Taiwan
|
5.36
|
Indonesia
|
5.33
|
Chinese Mainland
|
4.12
|
Hong Kong
|
4.05
|
Philippines
|
3.94
|
Singapore
|
3.86
|
Malaysia
|
3.78
|
India
|
3.64
|
Source: The Wealth Report Attitudes Survey 2019
Percentage of clients with domestic property investments in 2018 (excluding first and second homes)
|
|
Percentage of clients with international property investments in 2018 (excluding first and second homes)
|
Philippines
|
48%
|
|
Hong Kong
|
32%
|
Malaysia
|
42%
|
|
Malaysia
|
28%
|
South Korea
|
38%
|
|
South Korea
|
28%
|
Taiwan
|
38%
|
|
Chinese Mainland
|
26%
|
Chinese Mainland
|
36%
|
|
Singapore
|
25%
|
Hong Kong
|
25%
|
|
Philippines
|
22%
|
Singapore
|
25%
|
|
Indonesia
|
15%
|
Indonesia
|
19%
|
|
Taiwan
|
15%
|
India
|
18%
|
|
India
|
14%
|
Source: The Wealth Report Attitudes Survey 2019
According to the Wealth Report Attitudes Survey 2019, Hong Kong buyers are most likely to invest in the UK (55%), Australia (30%), Singapore (25%), the US (25%), and Canada (20%).
Prime Residential Property
Prime International Residential Index (PIRI)
Source: The Wealth Report 2019, Page 30 - 31
This year, the PIRI tracks the movement in the price 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:
· In 2018, the overall index increased by 1.3%, compared with the 2.1% in 2017, and the Index’s lowest rate of annual growth since 2012.
· Of the 100 locations tracked by PIRI, over 70% recorded flat or rising prices in 2018. Only 5 locations recorded double-digit growth, comparing 11 locations last year.
· Manila in Philippines leads the rankings (+11.1%), following by Edinburgh (+10.6%) and Berlin (+10.5%) on the second and third position.
· Hong Kong has dropped from 17th to 47th place in the index, recording 1.8% prices growth yearon year. While Guangzhou has dropped from the first place to 39th with only 2.3% price growth.
Knight Frank Prime International Residential Index (PIRI 100)- Annual change in prime prices
No.
|
Location
|
Annual % change
(Dec 17 - Dec 18)
|
|
|
1
|
Manila
|
11.1%
|
|
2
|
Edinburgh
|
10.6%
|
|
3
|
Berlin
|
10.5%
|
|
4
|
Munich
|
10.0%
|
|
5
|
Buenos Aires
|
10.0%
|
|
6
|
Mexico City
|
9.5%
|
|
7
|
Singapore
|
9.1%
|
|
8
|
Boston
|
8.6%
|
|
9
|
Madrid
|
8.1%
|
|
10
|
San Francisco
|
7.8%
|
|
11
|
Tokyo
|
6.8%
|
|
12
|
Jersey
|
6.5%
|
|
13
|
Barcelona
|
6.5%
|
|
14
|
Toronto
|
6.3%
|
|
15
|
Seattle
|
6.1%
|
|
16
|
Lisbon
|
6.0%
|
|
17
|
Algarve
|
6.0%
|
|
18
|
Chamonix
|
6.0%
|
|
19
|
Paris
|
5.3%
|
|
20
|
Frankfurt
|
5.1%
|
|
Sources: All data comes from Knight Frank’s global network with the exception of: Tokyo (Ken Corporation); São Paulo and Rio de Janeiro (Fundação Instituto de Pesquisas Econômicas); Oslo (Torbjørn Ek); Chicago, Los Angeles, Miami, New York, San Francisco, Seattle and Washington DC (S&P CoreLogic Case-Shiller); Barcelona (Ministerio de Fomento); Jersey (States of Jersey); Berlin and Frankfurt (ImmobilienScout 24); Toronto (Toronto Real Estate Board); Mexico (Sociedad Hipotecaria Federal); Stockholm (Svensk Mäklarstatistik AB).
Notes: All price changes in local currencies. Data for Cyprus relates to the period June 2017 to June 2018. Data for Barcelona and Jersey relates to the period September 2017 to September 2018. Data for Chicago, Los Angeles, Miami, New York, San Francisco, Seattle and Washington DC relates to the period October 2017 to October 2018. Data for Abu Dhabi, Berlin, Doha, Dubai, Frankfurt, Rio de Janeiro, Riyadh, São Paulo, Toronto and Vancouver relates to the period November 2017 to November 2018. Data for Stockholm relates to the period 1 January 2018 to 5 December 2018. Price change for Tokyo relates to properties above ¥100m.
Data for Boston relates to downtown condominiums. Data for Buenos Aires relates to new-build properties only.
Hong Kong’s luxury homes remain the second most expensive in the world
Source: The Wealth Report 2019, Page 34
Monaco - for the 12nd consecutive year – is confirmed as the most expensive city to buy luxury residential property, with US$1 million buying just 16 square metres of accommodation. Not far behind, Hong Kong, New York and London occupying second and third. US$1 million would buy 22 and 31 square metres, respectively.
RELATIVE VALUES: How many square metres of prime property US$1 million buys across the world
City
|
Square Metres
|
Monaco
|
16
|
Hong Kong
|
22
|
New York
|
31
|
London
|
31
|
Singapore
|
36
|
Los Angeles
|
39
|
Geneva
|
41
|
Paris
|
46
|
Sydney
|
52
|
Shanghai
|
57
|
Beijing
|
67
|
Tokyo
|
67
|
Berlin
|
73
|
Miami
|
93
|
Melbourne
|
97
|
Mumbai
|
100
|
Istanbul
|
109
|
Dubai
|
143
|
Cape Town
|
177
|
Sao Paulo
|
200
|
Source: Knight Frank Research, Douglas Elliman, Ken Corporation.
All data Q4 2018 based on exchange rate on 31 Dec 2018
Prime residential price forecast 2019
No.
|
City
|
Forecast
|
1
|
Madrid
|
6%
|
2
|
Berlin
|
6%
|
3
|
Paris
|
6%
|
4
|
Cape Town
|
6%
|
5
|
Miami
|
5%
|
6
|
Monaco
|
4%
|
7
|
Vancouver
|
3%
|
8
|
Sydney
|
2%
|
9
|
Los Angeles
|
2%
|
10
|
Geneva
|
1%
|
11
|
Melbourne
|
1%
|
12
|
London
|
1%
|
13
|
Auckland
|
1%
|
14
|
Singapore
|
0%
|
15
|
New York
|
0%
|
16
|
Dubai
|
-2%
|
17
|
Shanghai
|
-3%
|
18
|
Mumbai
|
-5%
|
19
|
Buenos Aires
|
-5%
|
20
|
Hong Kong
|
-10%
|
Source: Knight Frank Research, The Wealth Report 2019 (Page 55)
Looking forward, Hong Kong is expected to see prime residential flat prices to drop by 10% in 2019 and stabilise gradually, while the super luxury residential prices is expected to correct by 0% to -5% in 2019.
Real Estate Investment
Source: The Wealth Report 2019, Page 47
Local and cross-border invested volumes (12 months to Q3 2018)
No.
|
Destination Market
|
Investment Volume
|
1
|
US
|
US$414bn
|
2
|
UK
|
US$76bn
|
3
|
Germany
|
US$69bn
|
4
|
France
|
US$44bn
|
5
|
Chinese Mainland
|
US$32bn
|
6
|
Japan
|
US$31bn
|
7
|
Hong Kong
|
US$28bn
|
8
|
Australia
|
US$27bn
|
9
|
South Korea
|
US$23bn
|
10
|
Netherlands
|
US$21bn
|
Source: RCA
The most popular types of investment by investment volumes (12 months to Q3 2018)
No.
|
Property Type
|
Investment Volume
|
1
|
Office
|
US$330bn
|
2
|
Apartment
|
US$202bn
|
3
|
Retail
|
US$153bn
|
4
|
Industrial
|
US$140bn
|
5
|
Hotel
|
US$62bn
|
6
|
Senior Housing & Care
|
US$20bn
|
Source: RCA
Private capital investment local and cross border investment (12 months to Q3 2018)
No.
|
Destination Market
|
Investment Volume
|
1
|
US
|
US$178bn
|
2
|
UK
|
US$13bn
|
3
|
Hong Kong
|
US$12bn
|
4
|
Germany
|
US$11bn
|
5
|
France
|
US$9bn
|
Source: RCA
The most popular types of investment for private capital by investment volumes (12 months to Q3 2018)
No.
|
Property Type
|
Proportion
|
1
|
Apartment
|
35%
|
2
|
Office
|
29%
|
3
|
Retail
|
15%
|
4
|
Industrial & logistics
|
11%
|
5
|
Hotel
|
8%
|
6
|
Senior Housing & Care
|
2%
|
Source: RCA
Thomas Lam, Executive Director and Head of Valuation & Advisory, says: “Hong Kong ranks the 3rd in the world in terms of attracting cross border and domestic private capital investment, just after the US and UK. This outstanding ranking reinforces the city's leading position in attracting global private wealth.”
David Ji, Director and Head of Research & Consultancy, Greater China, says: “In terms of private wealth investment on the Chinese Mainland, cross border money only takes 16% of this market segment, ranked only 12th globally. So there is some effort to be made to make the Mainland market more attractive to overseas private wealth.”
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