While many middle and upper middle class Chinese are turning their backs on the Australian property market following a series of measures designed to cool the market, ultra-rich Chinese are as resilient as ever.
According to Bain & Company and China Merchants Bank’s China Private Wealth Report, Australia is the third most popular destination for ultra-rich Chinese nationals who want to invest offshore.
With interest in the top two investment destinations—Hong Kong and the United States—falling by 18% and 3% respectively, there has been a 7% jump in private Chinese wealth flowing into Australia, the report said.
At the same time, China’s pool of private wealth ballooned to CNY165trn (roughly $31trn) in 2017. This is six times what the nation’s private wealth was a decade ago, and is twice the size of China’s GDP.
According to the report, there are now 1.6 million high-net-worth Chinese with at least CNY10m to invest. This is a considerable increase from 180,000 in 2006.
More than half (56%) of these high-net-worth individuals have invested offshore, up from 19% in 2011. Moreover, 24% of the 3,000 wealthy Chinese surveyed had private investments in Australia, with interest in both Australia and Canada on the rise, the report’s authors said.
The top three reasons for Chinese investment offshore were: diversifying investment risk (82%), market opportunities (51%), and the desire to migrate (32%). Meanwhile, the most common overseas investments were cash deposits, stocks and bonds, and investment property.
Pool of high-net-worth Chinese has broadened
Eight years ago, China’s wealthy were predominantly first-generation entrepreneurs (70%). This percentage fell to 41% in 2017, as the make-up of the country’s rich has broadened.
Second-generation successors (10%), professionals (29%), and “other” (14%) account for half of the high-net-worth individuals surveyed. (“Other” comprises a melange of celebrities, actors, and sportspeople.)
“As the number of China’s wealthy continues to grow exponentially, it’s clear from the research that they are incredibly diverse, have a multitude of needs and that their priorities are starting to shift,” said Jennifer Zeng, partner at Bain & Company Hong Kong.