APAC to host a quarter of the world's ultra rich by 2025: Knight Frank

Individuals in APAC with a net worth of over US$30m are expected to grow 33% in the next five years.

According to Knight Frank’s latest edition of The Wealth Report, Asia-Pacific’s population of ultra-high-net-worth individuals (UHNWIs) – those with a net worth of over US$30 million or more including their primary residence – is predicted to grow 33% in the next five years to 2025, faster than the global average of 27%. The predicted rise of UHNWIs to 168,567 in Asia-Pacific will largely be led by Indonesia (67%) and India (63%), with New Zealand (52%) and Chinese Mainland (46%) following closely behind.

Over the same period, the number of billionaires and millionaires in Asia-Pacific is set to rise by 46% and 37% respectively. Asia-Pacific is already home to more billionaires than any other region (36% of the global total), with China being key to this phenomenon (246% forecast growth in the decade to 2025).

By 2025, Asia-Pacific will host almost a quarter of all UHNWIs, which is 17% more than what the region had a decade ago.

Liam Bailey, Global Head of Research at Knight Frank said, “In the middle of a global pandemic and the related economic crisis why should we be interested in the wealthy? Simply put if we are to understand market and asset performance then the wealthy form a central part of the story. The objective of The Wealth Report is to assess how the fortunes of UHNWIs are changing, where they spend time, what they invest in and what they are likely to do next. From policy makers to investors, a lack of insight into the behaviour and attitudes of the “one-percent” risks a serious misreading of economic trends.”

Victoria Garrett, Head of Residential, Asia-Pacific at Knight Frank said, “While the COVID-19 pandemic has slowed down the world’s economic momentum, Asia-Pacific’s foothold as host to the world’s leading wealth hubs continues to strengthen. This is due in part to the fact that the region overall was able to respond early and adapt well to the newly emerged trends and opportunities that have arisen. Now with vaccines being deployed across the globe, UHNWIs in Asia-Pacific are considerably more bullish on the recovery which can be seen from the forecasted growth in the number of UHNWIs in this region over the next five years.”

Looking back at 2020, Knight Frank’s wealth sizing model reveals that the number of UHNWIs globally increased by 2.4%, one-third of the growth rate in 2019, bringing the total to more than 520,000. China saw the largest increase in its UHNW population (9,594 additional UHNWIs) followed by the US (6,080) and Japan (1,199).

Wendy Tang, Group Managing Director, Knight Frank Singapore, shared, “In spite of the pandemic led economic recession in Singapore and an overall fall in median household income from work of 2.4% between 2019 and 2020, Knight Frank’s wealth sizing model projected that the number of UHNWIs in Singapore increased by about 10.2% annually to 3,732. Singapore remains an attractive destination for the globally mobile, and the steps our government took to keep the country safe from the virus and to help businesses and residents financially to weather this catastrophe has elevated its standing among the world’s wealthy and further cemented the country’s traditional safe haven status. When coupled with strong and enduring economic fundamentals, stable governance, and an attractively competitive tax regime, Singapore offers a break in the clouds that pushed some of the world’s mega-rich to have a presence here in recent years.”

UHNWI sentiment

According to Knight Frank’s Attitudes Survey conducted in Q4 2020 of over 600 private bankers, wealth advisors, intermediaries and family offices managing approximately US3.3 trillion on behalf of UHNWIs across the globe, half said that their clients’ wealth had increased in the past year despite the pandemic and highlighted three key themes as to why: diversification, equities, and property – which is consistent to how they have adjusted their clients’ portfolio at the onset of the pandemic in late 2019.

Apart from the biggest wealth creation and preservation worry – the ongoing disruption by COVID-19 – respondents to our Attitudes Survey in Asia-Pacific* generally take an optimistic view in terms of wealth growth, with over 80% predicting their clients’ wealth to increase or increase significantly in 2021.

“Given the vaccine optimism, most major markets in Asia-Pacific (Australia, Chinese Mainland, Singapore, India, South Korea, and Taiwan) see a larger majority of their respondents (~90%) expecting wealth growth in 2021. It is also worth noting that markets struggling with the outbreak like India, Malaysia and the Philippines are also anticipating wealth growth, showing the strength and confidence in the continued growth of wealth in Asia,” Garrett added.

Tang further commented, “Given that South-East Asia has one of the fastest growing middle-class demographics in the world, the region is one of opportunity for businesses all over the world and Singapore is well-positioned to ride on the growth and acting as a jump-off point and a hub for the region. As such, the number of UHNWIs in Singapore is forecasted to enlarge by about 31.0% between 2020 and 2025 to 4,888.”

*Excluding Cambodia, Indonesia and Thailand

To read the full Wealth Report 2021, visit: https://www.knightfrank.com/wealthreport