The number of high net worth individuals (HNWIs) in the Asia Pacific region grew almost 10 per cent to 3.3 million in 2010, exceeding Europe for the first time and now trailing just North America, according to the 2011 Asia-Pacific Wealth Report from Merrill Lynch Global Wealth Management and Capgemini.
The total wealth of HNWIs grew 12.1 per cent to US$10.8 trillion over the year, and the number of ultra-HNWIs in the region increased 15 per cent to 23,000, with both growth rates exceeding global averages, the report stated.
In Australia, drivers of that growth included real gross domestic product (GDP) growth of 2.8 per cent, market capitalisation increase of 15.3 per cent in 2010, and an increase in housing prices of 5.8 per cent for the year.
An improved exchange rate and positive merchandise trade account and increased export demand of almost five per cent also contributed to the growth, according to the report.
However the increase in individual wealth is expected to be inhibited in the 2010-11 financial year by a fiscal deficit of 2.5 per cent and a budget deficit of 1.3 per cent of GDP.
In Australia, HNWIs allocated 40 per cent of wealth to real estate compared to 27 per cent in the Asia-Pacific overall, with Australians allocating far less to fixed income and cash. Real estate is expected to remain the preferred asset class of Australian HNWIs in 2012, the report stated.
The Asia-Pacific HNWI population was highly concentrated, with Japan accounting for more than half of HNWIs in the region and three quarters coming from Japan, China and Australia.
Since the majority of Asia-Pacific HNWIs source their wealth from business ownership, wealth management firms that can generate value to HNW clients from across different business units (such as leveraging the corporate and investment banking resources) will be able to serve clients better, the report stated.
This is especially pertinent for Asia-Pacific's ultra-HNWIs because of the large scope of their wealth and investments, which span regions as well as asset classes, the report stated.