Luxury is the name of the game for many high-net-worth individuals seeking to enjoy their lives by doing whatever they choose with all that money, and high-net-worth individuals in Asia are no exception.
Julius Baer recently released its fifth annual Wealth Report: Asia, which tracks the cost of luxury goods and services, along with wealth creation, in 11 Asian cities — Bangkok, Hong Kong, Jakarta, Kuala Lumpur, Manila, Mumbai, Seoul, Shanghai, Singapore, Taipei and Tokyo. According to the report, the pool of investable assets held by high-net-worth individuals in Asia could reach $14.5 trillion by 2020, amounting to growth of 160 percent in the next five years.
Of this amount, Chinese high-net-worth individuals are the projected regional leaders, with wealth of $8.25 trillion expected by 2020 (up from $5.1 trillion anticipated for 2016). Thomas Meier, Asia Pacific region head with Julius Baer, says in a statement:
“Our forecasts reflect the belief and confidence that China has ample room to ease monetary and fiscal policy to both stabilize and boost the economy.”
According to the report, the wealth gap between high-net-worth individuals in China and India is expected to narrow in the next decade, with Indian high-net-worth individuals’ wealth projected to reach $1.425 trillion in 2016 and $2.3 trillion by 2020. And, despite anticipated GPD growth of only 3.2 percent this year because of the depreciation of the rupee against the U.S. dollar, India’s economy “has found its footing and is in a period of positive development,” notes the report.
Given India’s high-net-worth wealth creation is projected to rise 94 percent between 2014 and 2020 versus 74 percent for China during this same period, a continuation of this trend for at least a decade will help shrink India’s wealth and economic gap with China.
Results for the 2015 Julius Baer Lifestyle Index, included in the report, indicate the most expensive cities for goods exclusively are Shanghai, Bangkok and Singapore, which overlaps with the list of the most expensive cities for goods and services — Shanghai, Hong Kong and Singapore.
With respect to residential property, lifestyle cost has increased by 17 percent year-over-year (and in local currency) in Hong Kong, according to the report. This is the most for all 11 cities covered by the index. Residential asset costs in Shanghai took second place, up 15 percent between 2015 and 2014. Most cities saw decreased residential lifestyle costs, including Mumbai (–9 percent), Kuala Lumpur (–8 percent) and Tokyo (–6 percent).
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Jennifer Molloy is senior editor of Institutional Real Estate Asia Pacific.
