Soaring real estate prices in China helped fuel an increase in Asian billionaires, who now outnumber their American counterparts for the first time, according to a report Wednesday.
The number of Asian billionaires rose by one-quarter in 2016 to 637, compared to 563 billionaires in the United States and 341 billionaires in Europe, according to a joint report by UBS Wealth Management and PricewaterhouseCoopers. The U.S., however, still has the largest concentration of billionaire wealth, totalling $2.8 trillion.
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In 2016, the Asian continent added a new billionaire about every other day and total wealth increased by one-third to about $2 trillion from $1.5 trillion, the report found.
The majority of the new billionaires are from the continent’s two biggest economies, China and India, their wealth fueled by the rebound in commodity prices and skyrocketing Chinese housing prices, according to the report.
"If the current trend continues, we’re expecting Asian billionaire wealth to surpass U.S. wealth in the next four years," Thomas Holly, asset and wealth management leader at PwC, told Mansion Global.
The Chinese housing market, in particular, gave billionaires a boost from both their personal investments in luxury homes and in the values of commercial investments, Mr. Holly said.
Four Asian cities are leading the world in terms of price appreciation for luxury residential. Data from Knight Frank global real estate brokerage shows prime properties in Shanghai increased more than 27% in 2016, nearly 27% in Beijing and Guangzhou, China, and 16.6% in Seoul.
All real estate wealth is however unrealized until a sales event, making it vulnerable to market changes and, particularly in China, to government intervention, Mr. Holly noted.
"Asian growth is in no small part fueled by their investment in residential housing," he said. The question remains whether that will be "compromised at all by intervention government," he added, in reference to China’s cooling measures. The Chinese government hasraised requirements for down payments and residency as a way to curb speculative buying, as well as cracked down on outflows into foreign real estate.
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Globally, real estate investment was the fifth greatest source of billionaire wealth, following consumer and retail industries, technology, financial services and materials. Combined, billionaires had about $553 billion of their wealth in real estate in 2016, an increase of 17% from 2015.
Beyond real estate, the report also found that once they’d amassed their wealth, billionaires were increasingly investing in art and sports.
"To get into sports is an expensive proposition," Mr. Holly said, noting that many sports team owners first amassed their wealth from real estate or technology. "Once you are a sports owner, it is a complete passion."