Explosion of riches

Asia's affluent middle class is rising rapidly as wealth in China is set to overtake Japan's by 2015

No matter how you try to measure it, Asians are becoming wealthier. Fly into any capital city in the region and at once you will be struck by the display of wealth. From flashy condominiums to shopping precincts that cater to the surging middle class, Asia's affluent are growing.

It has been estimated by HSBC that by 2015 financial wealth in China will overtake Japan's, while emerging Asia is on course to eclipse the United States.

Singapore is being tipped to overtake Switzerland as the wealth capital of the world within this decade.

The value of China's residential real estate has now surged past Japan's while Chinese investors have become the biggest foreign buyers of apartments in New York, Sydney and London.

Frederic Neumann, co-head of Asian economic research with HSBC, says it is hard to overlook Asia's rising wealth.

He does make the point, however, that not everyone in Asia is reveling in new-found wealth.

"Amid all the hype, it's often forgotten that the majority of people in the region continue to live in poverty, with those fancy bags, let alone more basic necessities, still a distant dream," Neumann says.

Abhineet Kaul, principal consultant with Frost & Sullivan, says that in any capitalistic society, "some inequality driven by innovation, growth and investment is healthy as it rewards individual initiative and enterprise".

"However, this growing chasm is a concern for Asia because on the one hand, this divide is an outcome of economic growth, yet on the other the region remains home to more than 1.7 billion surviving in poverty," he tells China Daily.

"As history has shown, extreme wealth inequality can often precipitate social instability and it has been at the heart of political upheavals."

In the Philippines, for example, it has been estimated that just 40 of the country's richest families account for an estimated 76 percent of the country's GDP.

The top 40 account for 34 percent of the GDP in Thailand, 5.6 percent in Malaysia and 2.8 percent in Japan.

Even if prosperity is, so far, only enjoyed by a small sliver of local populations, the rise of Asian wealth that powers those luxury sales has nevertheless been stupendous.

"How rich the region has become exactly is hard to say - and it's even more difficult to say with precision how the wealth is distributed among individuals," Neumann says.

According to the Asia-Pacific Wealth Report 2013 by the Royal Bank of Canada and French multinational Capgemini, the total wealth of high net-worth individuals in the region - defined as those with investable assets of $1 million and above - is expected to rise to $15.9 trillion by 2015 compared with $12 trillion in 2012.

Wealth of the equivalent group of individuals in North America stood at $12.7 trillion in 2012.

Deloitte estimates that 3 billion people in Asia will have joined the middle class by 2030, and by 2050 the region will account for more than half of the world's financial assets.

Keith Pogson, head of assurance practice for banking and capital markets with EY, says geographical and cultural differences throughout Asia make it difficult to draw similarities.

"But we know Asia is growing economically and that is driving an expanding and wealthy middle class," he says.

So where do Asia's wealthy spend their money?

In recent years, spending in the region has increased on cars, boats, private jets, luxury goods and property, and investments with wealth managers have increased in Hong Kong and Singapore.

Frost & Sullivan's Kaul says "the exact luxury spending mix varies depending on the specific nationality in question."

"For example, according to one report, the Singaporean wealthy allocate about a quarter of their wealth in real estate compared to about a fifth for Hong Kong's wealthy," he says.

In a report this week, Reuters said that marina developers in Southeast Asia are "racing to build berths to address the latest problem vexing Asia's rapidly growing ranks of ultra-rich: Insufficient parking lots for their superyachts".

The news agency reported that yacht sales in Asia currently account for 9 percent of the global market share, according to consultancy Wealth-X.

"While the number falls behind North America's 44 percent and Europe's 34 percent, industry experts expect sales to pick up rapidly within the next few years as the number of multi-millionaires in the region increases," the report said.