Asia’s Wealthy Park Cash in Cars, Homes, Art and Wine
Asia’s Wealthy Park Cash in Cars, Homes, Art and Wine – CNBC.
In their latest annual wealth report, Capgemini/Merrill Lynch said the number of Asian high net-worth individuals, defined as having over $1 million in disposable income, soared to 3.3 million in 2010, while their wealth surged to $10.8 trillion.
Europe had 3.1 million millionaires last year with $10.2 trillion in disposable income, while North America had 3.4 million with $11.6 trillion.
With one quarter of the world’s wealth and excellent future growth prospects, discretionary spending in Asia (China, India and the rest of Southeast Asia) is surging:
Singh at MasterCard said wealthy Asians in 14 countries spent more than $1 trillion in discretionary consumption last year, on dining out, travel, luxury goods, vehicles and communications. Urban China accounted for about $255 billion, or about one-quarter of that spending. This will rise to $1.8 trillion by 2015, with spending by China’s urban wealthy rising more than 20 percent per year to more than $640 billion, MasterCard says.
A partial reason for this is that almost all of the wealth being created is new money, and the newfound wealthy often splurge on luxury goods:
“The younger ones who have more disposable income and are doing so much better than before, their willingness to spend dwarfs me all the time. I have peers in their 20s buying high-end Porsches, Lamborghinis and so on.”
Christie’s, the auction house, says Asian sales of art, fine wine, jewellery and porcelain in the first half of 2011 were 68 percent above the previous year at $515 million.
Asian investors also seem to be speculating on foreign property:
In recent months London property has emerged as a favourite choice of wealthy Asians because of the weak pound and sky-high real estate prices in their own countries. In the first six months of 2011, Asians have already spent more than 1 billion pounds ($1.6 billion) in new developments in central London, up from around 1 billion pounds for the whole of 2010, say realtors Knight Frank.
These numbers tell the tale; Asians that are accumulating wealth are increasingly spending their money on luxury goods.
BryanF- Is it possible that wealthy Asians are going through the same phase now that Americans and Europeans went through in the 90s and 00s? If their economy turns downward, or the Chinese housing bubble deflates, will these people with rising lifestyle expectations turn to credit to keep spending?