HOW ULTRA RICH IN ASIA INVEST
The challenges that confronted 2020 significantly impacted global wealth but Asia will still see a gradual emergence of wealth flow.
The new decade has witnessed a shaky start with events unfolding across Asia and the world. The COVID-19 outbreak, wildfires in Australia and ongoing global trade tensions have resulted in regional markets roiling from unprecedented challenges. All these developments are expected to have a dampening impact on Asia’s growth prospects this year, with businesses already feeling the pinch from lower activity levels.
According to Knight Frank’s Wealth Report 2020, Asia saw the world’s fastest growth of ultra high net worth individuals (UHNWIs) last year, dominating the list with an estimated increase of 13% or 11,800 UHNWIs since 2018, bringing the number of the uber rich in the region to 103,000 individuals. North America, where the largest portion of the world’s wealthiest lives, registered only a 6%increase in UHNWIs last year, while Europe was up by 4%.Despite recent and ongoing challenges, the number of UHNWIs around the world is predicted to grow by 27% in the five-year period between 2019 and 2024, taking the UHNW cohort to just under 650,000. Asia’s position as ahub for wealth is likely to hold fast during this time, with a five-year forecasted growth of 44%. While this would outperform Europe, it still trails behind North America.
Shift In Investment Strategies
While some are still waiting for clarity, those with the most at stake diversify their investments across geographies and industry sectors to protect their wealth. Though the forecast for long-term wealth creation remains positive, UHNWIs in Asia are largely more cautious in their outlook. Besides the global economy, US-China trade tensions and volatile exchange rates aredeemed most likely to impact both wealth creation and preservation in 2020. 70% of wealth managers polled in Asia are actively adjusting their clients’ portfolios in reaction to these concerns, with an estimated 28% of investment portfolios now allocated to property compared to 21% in equities and 19% in bonds.
Buying Additional Homes Responding to global uncertainty and political upheavals, Asia’s ultra-wealthy are becoming increasingly strategic in their geographic choices. Knight Frank research shows they are investing in additional homes in cities and countries where they see higher levels of stability.
Investors looking for long-term private residential within Asia, Singapore’s low taxes, secure political environment, pro-business government, high-quality healthcare and education infrastructure is an attractive proposition. Outside of Asia, safe haven markets of the US and the UK remain most favoured destinations for UHNWIs.
According to the Wealth Report 2020, two out of 10 Asian UHNWIs plan to buy a new home this year, driven primarily by factors such as upgrading their homes as a base for their children’s education or for business and employment reasons.
Wellness As A Priority
Far from chandeliers to gold fixtures, Asia’s wealthiest home buyers are increasingly valuing design that contributes to their physical and mental well-being. Wellness is now both broader and more holistic, extending beyond a spa escape to encompass the belief that ‘health is wealth’. Developments such as The Towers of the Waldorf Astoria Residences, New York – where a private reception, staffed by the hotel spa, gives residents access to a full array of wellness and therapeutic offerings – is designed to appeal to both the senses and sensibilities of Asia’s ultra-wealthy.
Research has shown homes that cater to residents’ health and well-being can command a premium.More developers are also offering amenities and services that extend beyond a shared gym or pool to onsite wellness concierges and carefully conceived landscaping that offers calming environs. In these uncertain times, the value of a sanctuary cannot be underestimated.
The Towers of the Waldorf Astoria Residences, New York, offers an array of wellness and therapeutic amenities.
About The Writer
As Head of Residential for Knight Frank in Asia Pacific, Victoria is responsible for developing the regional residential business, including project marketing, sales and leasing. She started her property career in London in 2003 with an independent agency, followed by a few years in commercial agency managing a boutique serviced office before shifting to residential sector. Joining Knight Frank in 2011, Victoria specialised in housing sales within Central London dealing with global UHNWI clientele. In 2014, Victoria relocated to the Middle East as Head of the New Homes team specialising
in investment and trophy assets before moving to Singapore in 2017.
This article was first printed in MillionaireAsia Issue 55 - Mar 2020