A woman shops for handbags at a Gucci luxury boutique at the IFC Mall in Shanghai earlier this month. For the first time on record, Asia-Pacific has the highest number of wealthy citizens of any region in the world – a shift that symbolizes the tilting of global economic clout.CARLOS BARRIA/Reuters
Asia-Pacific has the largest number of wealthy citizens of any region in the world – a shift that underscores the tilting of global economic clout.
The number of high-net-worth individuals rose 1.6 per cent in Asia-Pacific last year to 3.37 million people, led by growth in China and Japan along with Malaysia and Indonesia, an annual report about global wealth shows.
That surpasses North America's high-net-worth population of 3.35 million. It's the first time in the report's 16-year history that neither Europe nor North America is at the top of the regional comparisons.
The tally is another sign of how the balance of power is shifting away from advanced economies and toward emerging markets. Economic growth has been weak in many industrialized countries since the recession destroyed real-estate and stock market prices.
Emerging markets, on the other hand, have led expansion during the rebound. By 2025, six major emerging economies – Brazil, China, Indonesia, South Korea and Russia – will account for more than half of all global growth, the World Bank predicted last year.
"It speaks to what's happening in the [Asia-Pacific] region: Greater numbers are coming into wealth as their economies grow," said Gay Mitchell, deputy chair of RBC Wealth Management, adding that she expects this population to grow in coming years.
There have never been more wealthy people in the world, according to the report by consulting firm Capgemini and RBC Wealth Management.
The number of high-net-worth individuals – defined as those with assets to invest of $1-million (U.S.) or more – rose 0.8 per cent last year to a record 11 million worldwide. Most of that growth was among those in the $1-million to $5-million wealth band, the report found.
When it comes to individual countries, the United States still has the higher number of high-net-worth individuals, followed by Japan and Germany. Together, those three countries comprise more than half of the world's wealthiest people. South Korea replaced India for 12th place, while Brazil had the greatest percentage leap in the number of wealthy people.
In Canada, the millionaire-plus crowd was little changed, at 279,900 people in 2011 from 281,000 a year earlier.
The global population of wealthy people is growing, but their fortunes ebbed – a little. Global wealth among high-net-worth individuals declined 1.7 per cent in 2011 amid market volatility. It fell in all regions except the Middle East.
The drop was the first since the 2008 global economic crisis, a year when wealth of high-net-worth individuals plunged 19.5 per cent, the report said.
That said, their total wealth still amounted to $42-trillion last year – the second-highest level since record-keeping began in 2005.
For this year, "although European Union leaders have taken steps to contain the sovereign debt crisis, weak growth and challenges in the euro zone are expected to add to the volatility," the report said.
The number of ultra-rich – those worth $30-million or more – fell, and so did their wealth, from 2010 levels, a change in part due to parking wealth in less liquid and more risky assets. North America has the highest number of ultra-wealthy people, at 38,000 in 2011.
Wealthy investors fled risk last year. Declining equity and commodity prices, and ebbing valuations of real estate, sent investors flocking to cash and fixed income to preserve their capital.
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GEN Y CANADIANS OPEN WALLETS
Canada is outpacing both the United States and Europe in the growth in luxury spending – fuelled in part by fine dining among members of Generation Y, an American Express report has found.
"What has proven most surprising is that in a soft job market, younger Canadians are dominating Canadian luxury spend growth in the core areas of fashion, travel and dining," said the report, based on spending data from 2009 to 2011.
Not only did Canada's luxury sector feel less impact from the downturn than happened the U.S. and Europe, but also Canadian spending levels have recovered more quickly. Canadian luxury spending has increased 13 per cent since 2009, while Europe and the U.S. have yet to reach pre-recessionary spending levels in the luxury segment.
Gen Y has become the "driving force" for growth in the luxury market, with spending up 33 per cent on luxury fashion between 2011 and 2009, 74 per cent in travel and 102 per cent on fine dining.
Their parents, meanwhile, seem to be growing thriftier. The Amex data suggests older generations, who once dominated the luxury market, have slowed spend growth over the same period.
Buying luxury goods online is becoming more popular across Canadian demographic groups; Gen X men in particular are becoming bigger buyers of high fashion, the report said.
Tavia Grant
Tavia Grant