The power of wealth shifting East, and the effect on the yachting industry
Market Commentary from Yachting Financial Solutions
29th June 2012
Asia is the new millionaire’s capital:
The number of millionaires in Asia has overtaken North America for the first time, in a sign of wealth shifting across the globe due to the economic downturn.
In the Asia-Pacific region there are now 3.37 million men and women with more than $1m in the bank, compared with 3.35 million in North America, a new world wealth report has revealed.
- Gold plated Infiniti sports car in China
But the overall level of wealth in North America is still the highest in the world, with its millionaires controlling $11.4tn, while Asian businessmen control $10.7tn- although wealth levels declined twice as fast in North America as in Asia in 2011.
In the U.K., which has the fifth highest number of millionaires, membership of the elite club dropped 2.9% from 454,300 to 441,300, while both Germany and France saw increases. The millionaire population of India was worst hit, after their number of millionaires fell by a fifth. The wealthy in Hong Kong, Singapore and Poland also suffered as a result of the effects of the Eurozone crisis.
The aggregate wealth of high net worth individuals declined overall for the first time since the worst of the downturn on 2008, as market volatility took its toll. The world’s wealthiest have $42tn at their disposal, down 1.7% on 2010, with all regions seeing a fall, except the oil-rich Middle East.
Researchers calculated millionaires as individuals who have the funds to invest at least $1m, and revealed that 9.9 million have between $1m and $5m. This group grew slightly, 1.1%, but the richest section, with more than $30m at their disposal, dropped 2.5% to 100,000 people, with the value of their wealth also down nearly 5%.
It is significant that for the first time this year there are now more high net worth individuals in Asia-Pacific than in any other region. However, losses in key markets such as Hong Kong and India meant that wealth contracted in Asia-Pacific overall.
Analysis from Yachting Financial Solutions on this shift
Yet more evidence of the surge of growth in East Asia that we reported on last month. This significant shift in wealth is one of the reasons we have evolved to employ a ’21st century investment strategy’. However it will also undoubtedly have an effect on the Superyacht industry, particularly when it comes to who owns the yacht you are working on!
The Superyacht market in China and the rest of East Asia is expected to follow what happened in Russia and the CIS countries during the 2000’s, when there was a huge increase in the number of Russian Superyacht owners. In 2010, Russian owners were responsible for 20 new Superyacht completions (the 3rd highest number of new deliveries in the world after the US and Italy). Chances are by now many of you are working for a Russian owner.
Whilst its demand is not yet at the same level as Russia, in recent years, East Asia has started to demonstrate a growing interest in yachting. Several global boat companies have jointly produced a range of Superyachts in China varying in length from 45 metres to 150 metres. Although actual figures remain sensibly lower than any other region, there is a constant growth in new deliveries in the Asian market. In 2010 there were 11 new Superyacht deliveries in East Asia, including 5 for Chinese clients.
The yachting market in China is still in its infancy, but following the success of the recently introduced boat shows in Shanghai and Hainan, its expansion is predicted to pick up pace.
Interestingly, while over 25% of the world’s billionaires come from Asia, only 4.5% of the world’s Superyacht owners are from the region.
This just shows how much room for growth and development there is in this market!
If the expansion of the Superyacht industry in East Asia mirrors the growth there in other industries, we can expect to be seeing a lot more Chinese yacht owners in the near future. It’s an exciting time for the yachting industry!
