The billionaire boom
Based on the growing significance of Asia, specifically China, Asia Pacific editor Ellie Brade spoke with Mykolas Rambus, CEO of Wealth-X, on big ticket spending trends in China, and on what the general spending habits of the world’s wealthiest may mean for the superyacht industry.…
Wealth-X has just released its ‘Wealth-X and UBS Billionaire Census 2014’ report, which provides crucial insight into the world’s ultra-wealthy, many of whom are existing superyacht owners or potential buyers. The report showed that the number of billionaires (those with a net worth of USD one billion and above) grew by 155, or seven per cent, from 2013 to 2014, totalling a record number of 2,325 with a combined wealth of USD 7.3 trillion. As well as a rise in the number of billionaires, the average wealth per billionaire has risen to USD 3.1 billion. Predictions in the report show that this growth trend is set to continue, with 3,605 billionaires by 2019.
The USA remains the country that is home to the largest number of billionaires, with 571 billionaires, followed by China with 190 and the UK with 130. Europe overall is home to one third of the world’s billionaires. And interestingly, only five percent of the world’s billionaires are worth more than USD 10 billion.
Of all the countries and regions Asia played a crucial role in this growth, with the fastest billionaire wealth increase, growing 18.7 per cent in the last year, and the region being responsible for a huge 30 per cent of the net increase of global billionaire wealth in 2014. Asia counted 52 new billionaires in 2014, 33 of which were from China. According to the report, at current growth rates, China will only overtake the United States as the country with the most billionaires in 2027.
"Throughout Asia, mainland China is hugely important due to the number of billionaires, and as potential superyacht owners typically need to only have a mean net worth of USD 680 million, there is also even more potential there," Mykolas Rambus, CEO of Wealth-X explained. "China is the story, that’s the reality. Singapore and Indonesia have good numbers and there are other important markets within Asia, but China is the owner’s market for the future."
From the perspective of long-term wealth creation, Rambus highlighted the fact that there is lot of wealth creation for ultra affluent individuals happening in Asia, most of whom are entrepreneurs and at a stage in their life where they are in their early sixties. When it comes to why these people might buy a supyeracht, family is key. "What we are finding is that as this first wealthy generation moves on and looks to pass on assets to the next generation, that superyachts are a platform for engaging with family," said Rambus. "The future of the superyacht industry in Asia is less about the luxury lifestyle – that’s of course a component, there’s no doubt about it – but really yachts are a private, secure, isolated way to spend time with family that is unique to the superyacht industry."
While yachts are of growing interest to Asia's most wealthy, they are still not top priority.
"Aside of superyachts, high end travel, art and aviation are other key big ticket items," said Rambus. "Many billionaires are in wealth creation mode, and when they are in work mode some of the first things they buy will be things like planes, to assist them in their wealth creation. So yachts are behind aviation thus far in China, but we are starting to see the interest and activity and engagement in yachts in Asia."
Aside of China, the more typical owner markets remain. "America is very important, as the US still has the highest number of billionaires, and Germany is also very important, as is the UK, Russia and the CIS; these are all top markets that individually should not be overlooked." In the more traditional wealth sources, wealth transfer is a trend that will become increasingly apparent. "Looking at the US as an example, there is a lot of wealth creation and wealth transfer happening, so one of the benefits for the yachting industry is that you have a baby boomer generation of entrepreneurs handing their wealth to their children," said Rambus. "The saying often goes that the first generation make the money, the second generation spend it and the third generation lose it. We are on the verge of a lot of thirty and forty somethings inheriting substantial fortunes; history has shown that they often spend more on luxury consumption, and that’s true across every country and every ethnic group."
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