(6 March 2019, Hong Kong) Knight Frank, the independent global property consultancy hosted a press conference this afternoon launching The Wealth Report 2019 in Hong Kong. Now in its 13th year, The Wealth Report provides a unique global perspective on private wealth and prime property. The annual publication includes the Knight Frank City Wealth Index; price movements across 100 luxury residential property markets; and the results of the Attitudes Survey. Headlines from the report include:
- In 2018, Asia is home to the third largest population of ultra-wealthy people in the world.
- In 2018, Japan leads in Asia with 18,534 ultra-wealthy individuals, followed by 9,953 on the Chinese Mainland, 3,598 in Singapore and 3,010 in Hong Kong.
- Chinese Mainland expects to see the third strongest growth in ultra-wealthy population between 2018 and 2023.Hong Kong ranks the 3rd overall in the Knight Frank City Wealth Index, which classifies cities that matter to the wealthy.
- Hong Kong investors allocated 43% of their investment portfolio to property they live in, ranked third in Asia, just behind Chinese Mainland and South Korea.
- Manila in Philippines leads the Prime International Residential Index (PIRI) ranking, recording over 11% increase in prime property prices year on year. In contrast, Hong Kong has dropped from 17th to 47th place in December 2018, recording 1.8% prices growth year on year.
- Hong Kong’s luxury homes remain the second most expensive in the world for the 7th year in a row.
- Hong Kong expects to see up to 10% drop in luxury residential prices in 2019, while super luxury residential prices are expected to drop 0% to 5%.
- Hong Kong ranks the 3rd in the world in terms of attracting cross border and domestic private capital investment.
Nicholas Holt, Head of Research, Knight Frank Asia Pacific, says, “Despite softening momentum in the region’s economies, growth prospects in Asia remain favourable in the medium term. While China’s economy is expected to slow, emerging markets such as India and the Philippines will deliver some of the strongest growth over the coming years.”
Though the forecast for long-term wealth creation remains positive, UHNWIs in Asia-Pacific are less optimistic about growing their wealth in 2019, according to the Attitudes Survey. Against the prospect of continued higher interest rates and with the ongoing Sino-US trade dispute, wealth advisors in Asia (excluding Australia and New Zealand) were among the least optimistic globally about their clients’ ability to create wealth in 2019.
“The uncertainty around US-China trade tensions, a Chinese economic slowdown and Brexit have all dampened regional sentiment for the next twelve months. While a deterioration in any of these situations could further impact sentiment, Asia remains one of the key growth engines of the world economy,” says Holt.
Thomas Lam, Executive Director and Head of Valuation & Advisory says, “Despite the continued cooling measures in the property market, the supply of super luxury homes in Hong Kong remains limited and the super luxury prices continue to increase, surpassing the growth rate of mass residential prices. In Hong Kong, US$1 million would buy 22 square metres of prime property. At the same time, according to Knight Frank’s Wealth Report, the number of Hong Kong’s UHNWI’s rose by 22% between 2013 and 2018, the population is projected to rise by 27% over the next five years from 2018 to 2023. All of the above factors support Hong Kong’s major transactions on the rise. The increase in trading volume was the most significant increase in transactions with property prices exceeding HK$100 million. In 2018, the number of such transactions increased by over 30% year on year.”
Current allocation to property
According to the Attitudes Survey, real estate makes up 23% of UHNWI portfolios in Asia, higher than the global average of 21%. When asked “what percentage of your clients’ total wealth is allocated to the properties they live in (first and second homes)?” Chinese Mainland ranked highest in Asia at 50%. Indonesia ranked lowest at 18%.
Liam Bailey, Global Head of Research at Knight Frank says, “We have noted in previous years a growing desire from UHNWIs to increase the share of their portfolios dedicated to property. This trend has been confirmed by the growth in the average number of homes owned by wealthy people globally, increasing from 2.9 to 3.6 over the past year.”
Thomas Lam, Executive Director and Head of Valuation & Advisory, says: “Hong Kong ranks the 3rd in the world in terms of attracting cross border and domestic private capital investment, just after the US and UK. This outstanding ranking reinforces the city’s leading position in attracting global private wealth.”
David Ji, Director and Head of Research & Consultancy, Greater China, says: “In terms of private wealth investment on the Chinese Mainland, cross border money only takes 16% of this market segment, ranked only 12th globally. So there is some effort to be made to make the Mainland market more attractive to overseas private wealth.”
To download the report, please visit:
http://www.knightfrank.com/wealthreport