Asian Cities’ Appeal to Wealthy Increasing

Six of the 10 cities worldwide that most appeal to wealthy individuals as places to live and invest will be located in Asia within a decade, according to research that highlights how the region is rapidly closing the gap with the west.

Photo by: Cory Doctorow

The 2011 Wealth Report, to be published on Wednesday by Citi Private Bank, shows that Shanghai, Mumbai and Beijing are expected to shoot up the rankings by 2020, outpacing western rivals.

Mumbai — expected to rise from 38th place this year to seventh by 2020 — stands out as one of the fastest movers. Shanghai is forecast to leapfrog Beijing to become the third-highest ranked city in the world.

New York and London will fight off competition from rapidly growing markets to retain the first two spots, according to the report, but other European cities — including Paris, Brussels, Berlin and Frankfurt — are set to experience a decline in popularity.

The increasing appeal of Asian cities reflects the region’s strong economic growth rates relative to western markets, as well as high employment levels, lower taxes and “liveability” – their good education systems and infrastructure.

“When compared [with] other regions, Asia continues to be an attractive location for global talent, as it offers good job opportunities as well as a relatively easy environment for family relocation,” said Kwang-Meng Quek, global co-head of real estate investment at Citi.

The yearly report looks at the attitudes of wealthy individuals based on a survey of 160 of Citi’s global wealth advisers. Their views represent about 5,000 investors in 36 countries who are each worth more than $100m on average.

Assessment criteria included the level of economic activity in a city, including the number of international business headquarters there; their influence on the global political stage, judged by, for example, the number of embassies and think-tanks that they host; and the quality of life for residents.

While the rapid growth of China’s main cities is expected to slow as the government “puts the screws in” to slow the property market, Mr Quek believed it would exceed that of western counterparts such as New York and London.

Shanghai specifically would be boosted by wealthy investors in other parts of the country increasingly snapping up property there, he said.

“The focus is shifting — people in second- and third-tier cities will continue to buy places in Shanghai — it will become like the New York of China. [Property] prices may not go up as fast but still we would expect 10-15 per cent per year.”

Beijing, which already ranks in the top 10, is expected to rise more modestly, from eighth to fourth place within the next 10 years.

In spite of their meteoric rise, the Asian cities are not expected to topple New York and London, which the report says will remain the world’s two highest-ranked cities among wealthy investors and residents.

The other Asian cities in the top 10 are Hong Kong in fifth place, Singapore in sixth, with Tokyo taking the eighth slot. Paris and Moscow are in ninth and 10th places.

Last year’s report showed that London was trumped by New York as the favorite city for such individuals for the first time, as they took a dim view of the UK’s increasingly onerous tax system and tougher stance on City pay.

Mr Quek said the increasing popularity of India was a “pleasant surprise” for the market since the “scarcity factor” of land available for development provided investment opportunities.

Anand Narayanan, head of residential at Knight Frank India, said Mumbai was already “bursting at its seams”, adding: “Its insatiable appetite for growth is driving investments into mass transport infrastructure, housing and social infrastructure ... All this in turn is driving business and people in general to continue looking at Mumbai as the preferred location to be in,” he said.