Entering the second decade of its publication, the Wealth Report looks to the rest of 2017 and produces some findings that are illuminating and thought provoking.
Specifically for Singapore, where does the City state stack up in Knight Frank’s “The Wealth Report” 2017, 11th edition?
Continue reading to find out 3 key highlights from the report concerning Singapore and how it stacks up against other countries.
Singapore as a key urban hub will do well
Following the appointment of Trump as president of the USA, Dr Bremmer, Founder of Eurasia Group, sees key urban hubs across the world doing well. Such countries include Dubai, Singapore, Shanghai, Copenhagen, London and New York.
Dr Bremmer believes these these place that will benefit from technologies like driverless cars over the next 10 years.
However, the improvement and rise of these cities bring their own challenges.
These cities are not countries, so Dr Bremmer sees the central leadership eroding as the legitimacy of governments gets weaker.
Singapore’s case is slightly different because it is both a city and country. With that characteristic, the ability to drive national policies to help raise all boats is much easier.
Compared to selected countries, Singapore’s Ultra High Net Worth Individuals (UNHWI) growth for 2016 to 2026 will be in the middle of the pack.
Growth will be behind standout performers Vietnam, India and China, but ahead of South Africa, United Kingdom and the United States.
While the rate of growth in wealth held in centres such as Hong Kong and Singapore has averaged 10% annually in recent years, a number of tax amnesties is persuading some investors to repatriate funds.
For example, the Indonesian tax authorities’ amnesty on undeclared tax liabilities arising from foreign assets ran from July 2016 to March 2017. This was predicted to result in an outflow from Singapore in particular.
Singapore is a city that matters to the wealthy
The City Wealth Index uses four measures to identify the cities that matter to the wealthy
- Current wealth – the current population of UHNWIs
- Investment – the total amount of USD of private investment in proeprty during 2016, weighted in favour of those markets with a high proportion of cross-border inbound investment
- Connectivity – the number of in-and-outbound first and business class flights in 2016
- Future wealth – a forecast of each city’s UHNWI population in 2026, weighted in accordance with the findings of the Atittudes Survey.
Using the methodology, future wealth concentrations and investment firepower will be dominated by a tussle between Asian and North American Cities.
The third and fourth largest concentrations of wealth today, Hong Kong and San Francisco, are likely to be eclipsed by the rising fortunes of Singapore, Shanghai and Beijing.
These cities are expected to see their wealthy populations grow rapidly over the next decade.
Luxury residential market – Topping the pack
Presently, US$1m buys 43sqm of prime property in Singapore, less than 46sqm in Shanghai and 58sqm in Beijing.
On this measure, prices in Singapore are more expensive than these 2 key Chinese cities. That will be set to change over the next decade as China continues to post economic growth rates of more than 6% per year.
Compared to Monaco, Hong Kong and New York where US$1m buys 17, 20 and 26 sqm of prime property space, Singapore is still an attractive destination for prime property investors.
Looking ahead, Singapore’s prime residential property prices are expected to increase by 2% over the whole of 2017.
Given we are nearing the end of 2017, the forecast looks set to be about right, with a recovery in prices since the middle of the year.
The Knight Frank wealth report also surveys Family Offices actively involved in property investment and in the 2017 edition, UK tops the rankings for countries that private property investors are most likely to invest in.
Singapore came in 5th, behind the US in 2nd, Germany in 3rd and France in 4th position.
As the top Asian country, Singapore is ahead of Australia in 8th, China in 9th and Hong Kong in 10th position.