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Knight Frank The Wealth Report 2014 growth in Taiwan UHNWI population over the next decade

23 April 2014

• Asia will overtake Europe in terms of its billionaire population over the next 10 years  as a 66% growth in numbers pushes it to top spot (Page 2)
• The number of billionaires in China in 2023 will exceed the total number of billionaires in the UK, Russia, France and Switzerland combined (Page 2)
• In 2013, Taiwan’s UHNWIs population ranked 22nd  in the world with 1,503 (Page 2)
• Taiwan’s UHNWIs population is set to grow 28% to 1,918 by 2023 (Page 2)
• London and New York remain the top two most important cities to the world’s UHNWIs whilst Asia dominates the higher end of the rankings, accounting for four of the top 10 places (Page 3)
• Hong Kong is set to overtake its rival Singapore by 2024 as the leading Asian city (Page 3)
• Asian cities stand out in the global prime residential property price growth, led by Jakarta at 38%. Taipei recorded 25% growth.  (Page 4)
• According to REPro Knight Frank research, Taipei’s luxury residential prices ranked 6th in the world, just behind Monaco, Hong Kong, London, Singapore and Geneva. Taipei’s luxury residential prices surpassed New York, Shanghai, Beijing and Tokyo (Page 4) 
• Asian towers dominate the new Knight Frank Skyscraper Index with Hong Kong boasting the most expensive skyscraper space in the world. According to REPro Knight Frank research, Taipei ranked 3rd in the Skyscraper Index. (Page 7)


REPro Knight Frank, a leading property agency and consultancy in Taiwan hosted a press conference in Taipei for the launch of The Wealth Report 2014. Now in its eighth year, the report provides insights on wealth trends, prime residential and commercial property markets and the attitudes of the ultra-wealthy to property and other investment.

Wealth Creation
The Wealth Report has teamed up with leading wealth intelligence provider WealthInsight to provide comprehensive wealth distribution data covering around 90 different countries and cities.

Global key findings:
• The number of ultra-wealthy individuals across the world rose by 3% last year, despite continued economic turbulence.
• The number of Ultra High-Net-Worth Individuals (UNHWIs) – with US$30m or more in net assets excluding their main residence – has increased globally by 59% since 2003, more than doubling in the Middle East, Latin America, Australasia or Africa. The number of centa-millionaires – those with US$100m in net assets – has risen by 62%, while the tally of billionaires has climbed by 80% to 1,682.
• In the next decade the greatest percentage growth in UNHWIs will come from Africa with 53% more multi-millionaires with assets of US$30M+ forecast by 2023.   
• Knight Frank expects that London will still be home to most UHNWIs in 2023. Singapore and New York will leapfrog Tokyo and Hong Kong to take second and third places respectively.
• Property accounts for 24% of UHNWI investment portfolios. Over 40% of survey respondents – private bankers and wealth advisors – said their clients had increased their allocation to property last year, with 47% expecting it to rise further in 2014.

Asia key findings:
• In the highest wealth bracket – billionaires – Asia will surge to the top spot regionally, with 66% growth over the next 10 years, displacing Europe as the region with the largest billionaire population.
• Over the next ten years, the growth of UHNWIs in China at 80% and India at 99%, coupled with an eye-catching 144% increase in Indonesia and a stellar 166% hike in Vietnam, will help push the total number of UHNWIs in Asia up by 43%.
• Taiwan UHNWIs population ranked 22nd in the world reaching 1,503. It is set grow 28% to 1,918 by 2023. US will continue to have the largest UHNWIs population (by country), following by Japan and China. Taiwan will remain at 22nd position.
• In 2013, Taiwan has 440 centa-millionaire population and 29 billionaire population to rank 17 and 11 respectively.
• The number of UHNWIs in Asia is set to reach 58,588 by 2023, overtaking the total number in North America.
• Based on the growth forecast in terms of UHNWI city populations over the next 10 years, 19 of the top 20 cities are from Asia where Ho Chi Minh City emerged top, followed by Jakarta. Nairobi, at 17th position, is the only city outside Asia.
• Thomas Lam, Director and Head of Research & Consultancy, Greater China of Knight Frank, says the number of billionaires in China is expected to hit 322 in 2023, exceeding the total number of billionaires in the UK, Russia, France and Switzerland combined. Such growth is supported by positive outlook for wealth creation in China as the country is set to add an extra US$1 trillion to global GDP every year from 2013 to 2023.

The trend of centa-millionaire and billionaire population

• London has the largest number UHNWIs population, following by Tokyo and Singapore. Taipei ranked 13th in the world and 7th in Asia. The research tracked UHNWIs population in 87 cities. 
• London will still be home to most UHNWIs in 2023. Singapore will leapfrog Tokyo and New York to take second place, Taipei will still rank 13th in the world and 7th in Asia.
• In term of UHNWIs population growth, by 2023, Singapore’s UHNWIs population will increase more than 1,724, while Taipei to increase 321 ranking 15th in the world and 7th in Asia.

UHNWIs population ranked by cities

UHNWIs population growth between 2013 and 2023

Global Cities Survey
Shifts in wealth distribution contribute to changing fortunes in The Wealth Report’s Global Cities Survey, which measures the most important cities to the world’s UHNWI community. While London retains its top spot in 2014, New York looks set to overtake by 2024.

Leaving aside London and New York, Asia dominates the higher end of the rankings, accounting for four of the survey’s top 10 places. This is set to rise to five in 2024. One of the key differences, however, between Asia and Europe and North America is Asia’s lack of a single dominant city. This is why we are now seeing the power struggle where Singapore, Hong Kong, Shanghai and Beijing all contending for the title of future leading Asian city.

While Singapore leads the race in Asia’s most important city at the moment, Hong Kong is set to overtake it by 2024. Thomas Lam explains, “The dominance of China is unavoidable and Hong Kong’s unofficial role as the portal between its big brother and the rest of the world will ensure the growing dominance of the city over the next decade.”

Top 10 Global Locations for UHNWIs

Prime International Residential Index
Booming Asian markets dominates this year’s Prime International Residential Index (PIRI) but some of the cities most affected by the 2008 downturn are on the road to recovery according to Knight Frank.  

Asian cities dominate global property price growth
Jakarta heads PIRI, with annual growth of 38%, almost exactly the same as the rate seen in 2012, according to the research which appears in Knight Frank’s Wealth Report. With Bali number three in our table at 22% gain, Indonesia’s key markets are continuing to outperform the rest.

After a brief pause in 2012, the key Chinese markets staged a notable recovery in 2013. Prices in Beijing were up 17%, a dramatic increase on 2012’s 2.3% growth, while Guangzhou and Shanghai rose 14% and 7.3% respectively.

Nicholas Holt, Knight Frank’s Head of Asia-Pacific Research, says, “China, as always, has been difficult to predict, with the market continuing to defy expectations and several rounds of cooling measures. The reality is that in such an equity-driven market, the Tier 1 cities are likely to see both demand and pricing continue to head higher.”

Elsewhere in Asia, he expects Sydney’s prime market growth to continue into 2014, buoyed by low interest rates and steady foreign demand, especially from South-East Asia and China.

In terms of risks in 2014, he points to Hong Kong and Singapore. “Both markets peaked within the last 12 months, their price declines are accelerating and they are joined at the hip to what happens to interest rates in the US. A sooner than expected increase could hit these correcting markets hard.”

REPro Knight Frank’s statistics show that luxury residential prices in Taipei rose by 25% last year. The average luxury home prices in Taipei reach NT$1.7 million per ping in terms of registered floor area. If the calculation is based on net floor area, luxury home prices in Taipei are even higher than those in New York, Shanghai, Beijing and Tokyo, but still lower than those in Monaco, Hong Kong, London, Singapore and Geneva.

Taking The Palace as an example, its prices grew 400% from the date of presale to 2013. Its sold price rose from NT$2.38 million per ping (based on registered floor area) in 2012 to NT$2.98 million per ping in 2013, according to the transaction price recorded in the actual price registration system.

Figure: The Amount (Sq m) of Luxury Property US$1M Will Buy

Source: The Wealth Report 2014, Page 39 and REPro Knight Frank Professional Advisory Services

The surge in inbound capital into overseas development markets from Asia
On cross-border developments which is a growing phenomenon in Asia, Nicholas Holt adds, ”Rising global mobility of people and capital has been steering prime residential markets. This is evident in the Asian-led globalisation of prime residential development activity. In 2013, over 76% of total inbound capital into the development markets of the UK, the US and Australia originated from China, Singapore, Hong Kong, Malaysia and India. Brand building, diversification, growth and selling back to domestic buyers have been key drivers.”

Moving forward, he expects that London, New York, Hong Kong, Singapore, Paris and Sydney will continue to be targeted by those increasingly outward-looking developers in the future. Investors from China, India and Hong Kong will increasingly recognise home-grown brands when they buy luxury developments in London, New York, Sydney and Vancouver.

Source: The Wealth Report 2014, Page 36

Table PIRI – Average Price Change 2012 – 2013

Markets on the road to recovery
The Wealth Report points out that the size of the crisis precipitated by Lehman’s collapse hastened the revival in prime property markets. The resulting panic led to the slashing of interest rates and the beginning of quantitative easing (QE), reducing the cost of finance and encouraging affluent buyers into the prime property markets.

At the same time, government asset purchases reduced yields on alternative investments and, as a result, investors targeted tangible assets in safe haven markets. All the ingredients were in place for a recovery in global residential markets, as evidenced by price growth of 83%, 71%, 65% and 52% respectively in Beijing, Hong Kong, London and Singapore since March 2009.

Inaugural Skyscraper Index
The new Knight Frank Skyscraper Index is computed based on the commercial value on an analysis of the capital value of upper-storey floor space. The index reviews the values of the most expensive skyscraper space in 18 cities across the continents.
Asian towers dominate Knight Frank’s Skyscraper Index with Hong Kong boasting the most expensive skyscraper space in the world. Manhattan is the highest placed North American city, and London tops the European league.

“Skyscrapers continue to capture our imagination. New buildings dominate newspaper headlines, and those with viewing galleries become popular tourist attractions,” explains James Roberts, the Head of Commercial Research at Knight Frank.

“Unsurprisingly, island-based cities tend to embrace the tower to maximise space. According to data in the Knight Frank Wealth Report, Hong Kong has the most skyscrapers in the world, followed by New York.  London scores a lowly 45th place, with conservation restrictions ruling out tower developments in large parts of the CBD,” says Thomas Lam.

Capital value of skyscrapers in Taipei, calculated basing on net area with public spaces excluded, could reach US$28,698 per sq m, which is slightly lower than US$69,222 per sq m in Hong Kong and US$42,283 per sq m in Tokyo, and higher than those in New York (Manhattan), Singapore and London (The City), REPro Knight Frank’s research findings show.

Attitudes for property and other investment in Asia
Source: DataBank, The Wealth Report 2014, Pages 60 – 62
• Types of property for investment:

    o 45% of UHNWIs in Asia is planning to increase property investments in 2014, quite similar to global average of 47%. Russia/CIS market is the most bullish at 71%, followed by the Middle East market at 59%.
    o Thomas Lam highlights that close to half of the UHNWIs in China, Hong Kong and Singapore are increasingly interested in waterfront properties, much higher than the global average of 18%.

• Second-home ownership

    o Close to a quarter of the UHNWIs in Asia are considering purchasing another home in the next 12 months with the greatest interest from the Chinese (China) at 31% compared to global average of 22%.
    o The UK emerged as the top location for second-home ownership, followed by Singapore, the US and Australia in decreasing order of popularity among the UHNWIs.
    o Education has been a big driver in terms of prime residential and even eventually commercial property acquisitions. Close to half of the Asian UHNWIs (46%) are likely to send their children overseas for university education, particularly from Malaysia (60% of our respondents). The US, UK and Australia are the top 3 destinations for Asian UHNWIs to send their children for university education.

• Other investment

    o Equities are back in favour as the most popular asset class, with 70% of survey respondents expecting their clients to increase their stock market holdings in 2014.
    o Europe emerged as the market that UHNWIs globally expect will return the lowest returns in 2014. On the positive note, UHNWIs globally expect North America to deliver the greatest returns.


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