Asian financial centers Singapore and Hong Kong will attract more wealth from within and outside the region in the coming years — a development that will help to propel Asia Pacific to become the world's wealthiest region by 2019, a study by Boston Consulting Group showed.
The report, released on Tuesday, found that Asia Pacific experienced the fastest increase in overall wealth in 2016 but trailed behind North America. Private wealth in Asia Pacific, including Japan, is expected to surpass North America by 2019 and hit $77.8 trillion by 2021.
"In Asia Pacific, which is characterized by strong GDP growth, the key impetus will be new savings," BCG wrote in the report, adding that China was the largest source of offshore wealth in the Asia Pacific region, BCG said, contributing nearly $12 billion in revenue pools for private banks.
BCG's measurement of private wealth includes household holdings such as life insurance, pensions and assets such as equities, bonds and cash.
In the coming years, Asian financial hubs Singapore and Hong Kong are projected to attract more money from abroad compared to their European rival Switzerland, the business consultancy said.
Offshore assets in Singapore and Hong Kong would increase at a compound annual growth rate of 8 percent and 7 percent through 2021, respectively. That is quicker than Switzerland's projected 3 percent, according to the report.
Nevertheless, Switzerland retained its status as the world's top offshore wealth management hub with $2.4 trillion in assets in 2016 — higher than Singapore's $1.2 trillion and Hong Kong's $0.8 trillion, the BCG report showed.
"Hong Kong and Singapore remain the fastest-growing offshore centers globally because of both their status as the preferred booking centers for regional clients and the anticipation of strong growth in Asia-Pacific," the report said.
"Expansion is expected to continue in the long term, but China's ongoing restrictions on investment outflows may slow it down to some degree in the short term."
Asia Pacific's growing wealth has led to both global and regional banks expanding their wealth management operations in the region. Among those that have done so include UBS Group and DBS Group Holdings.