Super-rich before 40: growing rank to boost digital ownership of property
The number of multimillionaires in Hong Kong expanded last year at a faster clip than the global average, a trend that is likely to support demand for tokenisation and digital ownership of property, according to a Knight Frank survey. The pool of so-called ultra high-net-worth individuals (UHNWIs) in the city grew 11% to 7,593, of which 30% were under 40, the property consultancy said in its Wealth Report published on March 1.
Globally, the size increased by 9.3% to 610,568 with people below 40 making up a fifth of them. The number in China increased by 6% in 2021 to 93,854, with 29% of them below 40.
The survey counted people in 100 cities with at least US$30 million ($40.7 million) of wealth including their primary residences, and estimated for the first time the rank of so-called next-generation UHNWIs and what that could mean for the property market and their investment preferences.
“Digital real estate will become just as important as physical assets over the next decade,” the report cited James Wey, head of Singapore and Southeast Asia wealth management at JP Morgan Chase, as saying. “We have seen a big increase in real estate developers looking at tokenising properties and allowing investors to invest in those tokens,” he added.
Demand for tokenisation and digital ownership
of property has grown with wider adoption among the younger generation while Big Tech explores the next frontier of metaverse. Digital assets including non-fungible tokens and cryptocurrencies have lured investors at the same time regulators are raising their game against fraud.
The growth in Hong Kong’s multimillionaire population in 2021 was faster than in France, Japan and mainland China, matched the pace in the UK, but trailed the 13% increase in the US, the Knight Frank report showed.
In Hong Kong, the younger generation of UHNWIs usually has a strong sense of entrepreneurship, according to Martin Wong, director of research and consultancy for Greater China at Knight Frank.
They have a balanced mix of traditional blue-chip assets such as properties, stocks and watches, and emerging asset classes such as cryptocurrencies, digital arts and lifestyle commodities, Wong added.
Adrian Cheng Chi-kong, 42, the third-generation scion of developer New World Development, is one believer. He added virtual real estate to his personal portfolio in December, and invested in The Sandbox, part of Hong Kong-based gaming and blockchain unicorn Animoca Brands.
The Knight Frank report included an investment attitude survey with over 600 private bankers, wealth advisers, intermediaries and family offices overseeing more than US$3.5 trillion of wealth for UHNWI clients.
Besides interest in digital ownership of property, Knight Frank said the multimillionaires are keen to hold assets across different geographies. On average, they kept 27% of their investible wealth in real estate, according to the report.
“They are increasingly looking for homes overseas, a plan B and/or a second passport,” Sheldon Halcrow, an executive partner of Caleo Capital, said in the report.
From 2021 to 2026, Knight Frank expects the number of UHNWIs to increase by 26% in Hong Kong and 42% in mainland China.
Private capital investment in commercial real estate is expected to beat last year’s record inflows of US$405 billion despite the pandemic and economic uncertainty, the report said. That is a 52% jump over 2020, and 38% above the five-year pre-pandemic average.