Asia-Pacific’s HNW population now the second largest in the world, report

The number of high net worth individuals in the Asia-Pacific region has surpassed Europe and is now the second largest in the world, new research has found.

According to the report by wealth management firm Merrill Lynch and management consultancy Capgemini, Asia-Pacific’s HNW population grew 9.7% in 2010 to 3.3 million, exceeding that of Europe, which had 3.1 million HNW individuals in 2010, and nearing that of North America (3.4 million).

The wealth held by HNWs in Asia-Pacific also jumped by 12.1% to $10.8 trillion (€7.9 trillion) in 2010, compared with Europe’s $10.2 trillion, the study found.

There was also a large rise in the number of ultra-high net worth individuals in the region, growing by 14.9% to 23,000, compared to just 10.2% worldwide. UHNWs in Asia-Pacific are also getting richer more quickly than those in the rest of the world, with a 16.8% increase in wealth last year compared to 11.5% worldwide.

However, Asia-Pacific wealth is highly concentrated, with just three countries in the region – Japan, China and Australia – accounting for 74.4% of the local HNW population and 68.2% of its wealth.

Japan is the biggest HNW market in Asia-Pacific, home to 1.7 million millionaires that account for 52% of the regional wealthy population. Lagging behind is China, the second-largest HNW base in the region and fourth largest in the world, with 535,000 HNWs - 16.1% of the region’s total. Australia is home to 193,000 wealthy, representing 5.7% of the region’s HNW individuals.

This geographic concentration is likely to decrease, as other markets in the region are growing quickly. This is particularly the case in Hong Kong, whose HNW population jumped 33.3% in 2010 to 101,300, the highest growth in the world. India also reported strong growth and became the world’s 12th-largest HNW market last year.

According to the report, GDP grew 8.3% in Asia-Pacific excluding Japan in 2010. This helped the expansion of world GDP, which rose by 3.9%. The region is expected to remain the engine of global growth through 2012, the study also said.

HNWs in the Asia-Pacific region invested mainly in real estate and equities last year, according to the research. Real estate accounted for 27% of HNWs’ investments and equities for 26%. In the next two years, Asia-Pacific HNWs are expected to increase their holdings of equities, while reducing their exposure to properties.