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  1. Wealth
March 28, 2012

Wealth Report 2012: Asian superwealthy optimistic amid global uncertainty

By Spear's

While most of the world is pessimistic about the future, the Asian super-wealthy think they’ll be getting richer than ever, according to the Knight Frank/Citi Private Bank Wealth Report 2012, released today

by Sophie McBain and Josh Spero

While most of the world is pessimistic about the future, the Asian super-wealthy think they’ll be getting richer than ever, according to the Knight Frank/Citi Private Bank Wealth Report 2012, released today.

39 per cent of Asian centa-millionaires ($100 million-plus) feel ‘optimistic’ and 3 per cent ‘very optimistic’. Nowhere was nearly as ‘optimistic’ as Asia Pacific and North America was the only other region to report ‘very optimistic’ (5 per cent) in the report.

‘Pessimistic’ was much more prevalent elsewhere than in Asia Pacific: Europe & Russia had 36 per cent, Latin America 27 per cent and North America and Africa & Middle East both 25 per cent. Asia Pacific only had 9 per cent report ‘pessimistic’. The most popular option was ‘neither optimistic nor pessimistic’, although it did not reach 50 per cent in any region.

However, figures on which regions were more likely to buy luxury property in 2012, reflecting a belief in global economic stability beyond personal prosperity, showed that all regions expected to do so, with Africa & Middle East (74 per cent) and Latin America (64 per cent) leading the way.

Interestingly, Asia Pacific – despite its optimism – was the only region to report ‘very pessimistic’ at 3 per cent, and perhaps indicating a greater pessimism than otherwise indicated, 24 per cent of Asia Pacific centa-millionaires said they expected their luxury property portfolio to decrease.

A solid majority in each region was ‘neither optimistic nor pessimistic’.

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The report asked for the first time about attributes a city needs to be considered globally important; ‘personal safety and security’ (63 per cent) came out just ahead of economic openness (60 per cent). Factors like education, healthcare, transport and arts were far behind. Freedom of speech came in at 3 per cent.

This translated into the continued position of London as the most important city today and in ten years’ time, with New York in second in both cases. Hong Kong drops from third to sixth in ten years, while Beijing rises from ninth to third. Sao Paulo was the only new entry for 2022.

Shanghai is not on an irreversible upward trajectory yet: although commentators predicted that by 2050 Shanghai will become the most important city for HNWs, prime residential property prices fell 3.4 per cent there last year as China’s wealthy sought to relocate abroad, fearing a political backlash against rising inequality, as well as increased government involvement in property pricing.

Read surprising result about global luxury property prices in the Wealth Report 2012

The report echoed the familiar observation that wealth generation is shifting eastwards but emphasised that it’s ‘not all about China.’ There are now more centa-millionaires (those worth $100 million or more) in South-East Asia, Japan and China (18,000) than there are in North America (17,000) and Europe (14,000) — although of course the population of this Asian bloc is far larger than the other two.

While China is expected to double its number of centa-millionaires to 14,000 by 2016, it will not yet overtake the US, which is predicted to have 17,000 by then.

As well as focusing on robust growth in the BRICs, the report draws attention to Citi’s ‘Global Growth Generators’: Bangladesh, Egypt, Indonesia, Iraq, Mongolia, Nigeria, Sri Lanka and Vietnam.

It predicts that Nigeria will have the highest economic growth between 2010-2050, with projected GDP growth of 8.5 per cent over the period. Even taking into account Nigeria’s considerable natural resources, and its low base, it appears the report’s authors place little long-term economic significance on the country’s growing sectarian violence, political instability, institutionalised corruption and high poverty rates.

Singapore currently tops the table for GDP per capita, and is expected to retain this position to 2050. The UK doesn’t make it on the list of the top 10 countries with the highest GDP per capita in 2010, but is predicted to enter at number 8 in 2050, possibly a reflection of the city’s importance as an international financial centre and continued appeal for international HNWs.

A survey of HNWs attitudes towards investments revealed that prime property is considered a good investment choice for the wealthy, but also that HNWs are expressing an increasing interest in investments of passion such as art, fine wine and sport. In a time of international economic uncertainty, the authors reflect that investments of passion can at least be enjoyed even if their value decreases — but also that the Mei Moses World Art index increased 10 per cent in 2010 and has consistently out-performed equities since 2010.

The Wealth Report survey is in its fourth year, and draws on pricing data from the 71 of the world’s most desirable locations, as well as an attitudes survey representing 5,000 HNW and UHNW Citi Private Bank Clients.

Read more by Sophie McBain and Josh Spero

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