Local millionaires increase 42% in 2010 to a record 558,000

As Hong Kong's property market continues to soar, the number of millionaires in the city has expanded by a whopping 42 percent to a record 558,000 over the past year, with a good part of the newly rich making their fortune in real estate, a Citibank survey released on Tuesday shows.

The number of individuals with liquid assets worth more than HK$1 million now stands at 558,000, 164,000 more than in 2009 and representing 10.8 percent of Hong Kong's adult population. Of the 164,000 new millionaires, 29 percent said that they attained their status by selling their properties, up sharply from 8 percent in 2009, according to the Citibank survey. This is an indication that more people chose to take advantage of the surge in home prices by cashing in on their properties.

The survey, conducted between Dec 15, 2010 and Feb 1, 2011, polled 4,616 adults aged between 21 and 79.

"There is a real estate effect at work," Simon Chow, deputy country business manager at Citibank Global Consumer Group, said Tuesday at a media briefing.

With almost a third of the total composed of landlord-turned-millionaires, 47 percent of the newly rich made their money and became millionaires by investing in stocks, funds and foreign currencies.

But whatever the main reason, 83 percent of the millionaires said they own properties, compared with 76 percent in 2009. The proportion of millionaires who have investment in stocks, mutual funds and time deposits remains largely flat compared with 2009, according to the survey.

However, bonds are increasingly favored as a "yield-enhancing investment", said Chow, with 31 percent of the millionaires indicating that they have invested in bonds compared with just 20 percent in 2009.

Net assets the city's millionaires now hold averages HK$9.8 million, a year-on-year rise of 46 percent. Net property value, however, made up a bulky 65 percent of this. The average liquid assets held by the millionaire population amounts to HK$3.3 million.

Already a vital component of the millionaires' net assets, property values look set to make up an even bigger chunk of the rich's wealth. One in five millionaires in the latest survey said the they intended to buy property in 2011. Last year, only 12 percent had the intention of buying homes, although 14 percent actually did in the end.

The growing interest is fuelled by a stronger belief that the property market is in for another boom year in 2011 as 55 percent of the millionaires said that they expect the property market to "rise" in 2011, up from 31 percent a year ago. The proportion predicting a flat market dropped to 26 percent from 41 percent in the last survey. Meanwhile, 19 percent forecast a market contraction, down from 28 percent in 2009.

"The number of people who actually purchased property in 2011 may turn out to be higher than the number of people who said that they intend to do so, as was the case in 2010," said Chow.

China Daily

(HK Edition 03/09/2011 page2)