Economic Development

Asia-Pacific: Young and adventurous

December 10, 2012

Global

December 10, 2012

Global
Our Editors

The Economist Intelligence Unit

_____________________

In the near future, the Asia-Pacific region is expected to eclipse OECD economies in terms of GDP

In the near future, the Asia-Pacific region – home to the world’s most diverse culture, economic systems and living standards, as well as the largest number of high net worth individuals – is expected to eclipse OECD economies in terms of GDP. This trend bodes well for Asia-Pacific IMWIs, whose sources of wealth tend to be diversified and skewed towards real estate and sales of businesses as opposed to income from occupations as professionals or executives. They tend to live in places where opportunities abound: more than half of surveyed Asia-Pacific-based IMWIs are found in Singapore (31%) or Hong Kong (24%) both of which rank in the top five global cities on the EIU’s City
Competitiveness index (along with New York, London and Paris). Opportunities for entrepreneurs are further enhanced by the region’s very high savings and investment rates.

The EIU survey found that an overwhelming majority (81%) of IMWIs whose principal residence is in the Asia-Pacific region were also born there. As a group, IMWIs born in Asia-Pacific tend to be younger and less wealthy than their counterparts from North America and Western Europe. Close to half (46%) fall into the 40-and-under age group. This partially explains why they have yet to accumulate as much wealth as IMWIs born in Western Europe and North America, of which only 15% and 17% respectively are that young. Only about one in five (21%) have investable assets of more than $5m, and only 8% have more than $10m, compared with 13% in Western Europe and 14% in North America.

About 36% say they come from high net worth families, much more than the 23% seen in the other two regions. This might reflect the fact that
access to an advanced education was traditionally a bigger economic barrier in Asia-Pacific than in the other regions. This hasn’t stopped the region’s major business centers from achieving high educational standards today, however. Hong Kong, Singapore, Shanghai and South Korea lead the OECD’s world education rankings, conferring yet another advantage on businesses in the region.

While they are similar to their peers born in other regions in their tendency to derive income from their country of residence, they are far more likely (35% vs. 13% in Western Europe) to derive income from their birth country and they are unlikely to point to third countries. A propensity to invest very heavily in real estate is apparent among Asia-Pacific born IMWIs, with 27% doing so compared with 3% of IMWIs born in North America and 14% from Western Europe. They are less likely than North Americans but more likely than Western Europeans to invest in domestic equities (issued in their country of residence). Finally, they differ sharply from other IMWIs in their estate planning and charitable plans. They are much more inclined to leave their entire estate to their families, and while they tend to give less percentage-wise to charity, their donations are more than twice as likely to go to causes in their home countries.

Enjoy in-depth insights and expert analysis - subscribe to our Perspectives newsletter, delivered every week