Asia Pacific will soon have more high-net-worth individuals (HNWIs) than North America with their investment in real estate being a key factor increasing their wealth, according to data expert Capgemini and RBC Wealth Management.
Aside from higher Gross Domestic Product growth it is the rising property values across the globe which has helped increase the HNWI population in Asia Pacific to 17.3 percent compared to 13.5 percent elsewhere. Their wealth also expanded 18.2 percent compared to 12.3 percent in other regions, the 2014 Asia-Pacific Wealth report stated.
The Asia Pacific region now has 4.3 million HNWIs with a record USD14.2 trillion of assets which means it will have a bigger HNWI population than North America in two months and more HNWI wealth by 2015.
Asia Pacific has also seen the total number and wealth of ultra-HNWIs increase far more than any other region over the last six years with this being led by Australians as they have invested more in property than any other asset.
“Real estate represented the largest investment allocation made by Asia Pacific (excluding Japan) HNWIs, reflecting increased optimism and greater risk appetite in the region. Improved investor sentiment was also likely behind a significant decrease in cash held by Japanese HNWIs,” the report said.
Asia Pacific (excluding Japan) HNWIs’ real estate investment outstripped equities totaling 23 percent of their allocation, which is 3.5 percent higher than the rest of the world.
Australian HNWIs continued to allocate the most in real estate totaling as much as 33.1 percent although this has decreased from 40.6 percent recorded the previous year. The plunge was due to a dip in the Australian property market caused by fears of a property bubble forming on the back of record low interest rates.
Although investment allocations remained the same in China over the past year, Chinese HNWIs invested more in equities than their Indian counterparts amounting to 22.7 percent against 18.0 percent in India, but Indians invested more in real estate than the Chinese totaling 26.2 percent against 20.2 percent in China.