This week, Capgemini and RBC Wealth Management unveiled the latest the Asia-Pacific Wealth Report. Here, we zone in on the four insights most relevant for luxury brands.
Asia-Pacific, the center of a significant increase in wealth over the last decade, continues to be the driving force in global high net worth individual (HNWI) population and wealth growth.
Against this backdrop, Capgemini and RBC Wealth Management have released the Asia-Pacific Wealth Report (APWR) 2015, an in-depth look at the region’s HNWIs, including the trajectory of their population and wealth and their behaviors and preferences.
These are the four highlights from the report luxury brands need to know.
“ Asia-Pacific has seen HNWI wealth increase by 88% ”
In 2014 – Asia-Pacfic overtook North America as the region with the largest HNWI population.
The region has seen HNWI wealth increase by 88% since 2006, amounting to 40% of the US$19.2 trillion of HNWI wealth created globally through 2014.
Specifically, Asia-Pacific led all regions in HNWI growth in 2014 and registered an expansion of 8.5% for HNWI population and 11.4% for wealth. The brisk pace resulted in a high of 4.7 million HNWIs with a record US$15.8 trillion of assets.
In the lead-up to that time (2006-2014), Asia-Pacific has dominated HNWI growth, expanding its annualized HNWI population by 7.8% and wealth by 8.2%, above global rates in the 5% range.
In contrast, the other two mature regions, North America and Europe, have lost ground in terms of both HNWI population and wealth during that time.
HNWIs in North America are responsible for 26.0% of the growth in global HNWI wealth over the last eight years, while HNWIs in Europe contributed 14.8%.
In total, Asia-Pacific increased its HNWI population share to 32.0% in 2014 from 27.1% in 2006 and its HNWI wealth share to 28.1% in 2014 from 22.6% in 2006 (see Figure 4).
Ultra-HNWIs—those with more than US$30 million of investable assets—were the main drivers of HNWI wealth growth globally in 2014. Within that top-tier segment, the ultra-HNWIs of Asia-Pacific were the biggest drivers of HNWI wealth. Asia-Pacific ultra-HNWIs, accounting for 0.7% of the region’s HNWIs, grew their population by 14.3% and their wealth by 16.5%, compared to only 6.9% and 5.1%, respectively, for ultra-HNWIs in the rest of the world (see Figure 3).
The mid-tier millionaires of the region (with between US$5 million and US$30 million of assets) also had a substantial impact on global HNWI wealth growth, expanding their wealth and population in the range of 11%, compared to 6% for their counterparts in the rest of the world.
Only the segment known as the millionaires next door (with between US$1 million and US$5 million of assets) experienced slower growth in 2014 compared to their annualized growth rate from 2009–2014. This segment, making up nearly half of the region’s HNWI population, also had the lowest population and wealth growth rates (8.3% and 8.6%, respectively) of all segments.
HNWI wealth is expected to expand more rapidly in Asia-Pacific than any other region of the world through 2017. Annual growth of 10.3%, compared to 6.7% in the rest of the world, will propel Asia-Pacific HNWI wealth to US$21.2 trillion by 2017 (see Figure 6). Asia-Pacific already surpassed North America in HNWI population in 2014 and is on track to surpass it in HNWI wealth this year.
Much of the growth is expected to come from Emerging Asia, consisting of China, India, Indonesia, and Thailand. Emerging Asia’s expected annualized growth of 12.5% through 2017 is higher than Asia-Pacific’s 10.3% and nearly double the rest of the world’s 6.7%.
Mature Asia, which includes Japan, Australia, New Zealand, Singapore, Hong Kong, Taiwan, Malaysia, and South Korea, is also expected to grow at a rate of 8.9% through 2017, reaching US$12.0 trillion.
Within the Asia-Pacific region, India and China, in particular, have propelled Asia-Pacific HNWI growth in recent years and are expected to continue to act as drivers both regionally and globally in the years ahead.
These two markets represent nearly 10% of global HNWI wealth (see Figure 5), and account for 17% of the global increase in new wealth since 2006, adding US$3.2 trillion during that time. Together, the two countries witnessed annualized HNWI wealth growth of 12.4%, outpacing the 6.5% recorded by other Asia-Pacific countries, and the 4.8% registered by other markets across the globe.
Of the US$7.4 trillion of HNWI wealth added in Asia- Pacific since 2006, India and China accounted for an impressive 43%.
Continued growth is expected to result in India and China holding over 10% of all global HNWI wealth by 2017 (10.7%).
Their share within Asia-Pacific is also expected to rise to 35.5% by 2017, aided by the ongoing rise of the middle class and expanding domestic consumption. These factors should help spur robust economic and GDP growth, providing a solid platform for HNWI growth.
This is an excerpt of the Capgemini and RBC Wealth Management Asia-Pacific Wealth Report 2015. For further details we encourage you to download the full report here.
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