Singapore topped Hong Kong as the most desired place in Asia for so-called mobile millionaires to reside, with quality of life cited as the main attraction, a RBC Wealth Management survey showed.
Almost a third of the millionaires in Asia who live, work or spend more than half their time outside their countries of origin prefer Singapore, while 24 percent pick Hong Kong, the second most popular in the region, RBC and The Economist Intelligence Unit said in a joint research report yesterday.
Real estate led the list of preferred assets for the internationally mobile wealthy, according to the survey, which showed 23 percent of those in Singapore reporting a “high propensity” for property investment, compared with 7 percent in North America. The island’s home prices climbed to a record in the third quarter, prompting the government to restrict home loans and cap property development.
“Singapore always has this quality as a safe haven, not just for your money, but also for your family,” said Wai Ho Leong, a senior regional economist at Barclays Plc in Singapore.
For mobile millionaires who moved to Singapore, 89 percent ranked quality of life as important and 83 percent cited the country’s political stability as important, the survey showed. Infrastructure and educational opportunity were also given as reasons to live there.
Most Millionaires
Singapore posted a 14 percent increase in millionaire households to 188,000 last year, when the Asia-Pacific region countered a decline in wealth in Western Europe and the U.S., according to a Boston Consulting Group report published May 31.
The proportion of millionaire homes in the city was 17 percent, the highest in the world, followed by Qatar and Kuwait, according to Boston Consulting Group. Singapore has a population of 5.3 million, of which about 2 million are foreigners.
“High net worth individuals with global outlooks for their businesses and families are choosing Singapore to live and invest in,” Barend Janssens, the Singapore-based head of RBC’s wealth-management unit for emerging markets, said in a statement.
The city-state is grappling with the elevated inflation that comes with years of economic growth and population expansion on an island smaller than New York City, with rising demand fueling record property and car prices.
Property Boom
In the three months ended Sept. 30, the island’s private residential property price index rose 0.6 percent to a record 208.2 points, according to government data. In prime districts, apartment prices gained 0.2 percent, compared with a 1 percent increase in the suburbs.
The Monetary Authority of Singapore told lenders on Oct. 5 to restrict home-loan maturities “to curb continued upward pressure on residential property prices,” in an attempt to avert a housing bubble. The government said in September it plans to cap the number of homes that can be developed in suburban projects as it seeks to curb the increasing trend of so-called shoebox apartments.
The cost of a permit to own a small car for 10 years rose to an unprecedented S$78,523 ($64,300) on Dec. 5 from S$46,889 at the start of the year. That excludes the cost of buying a car. The government auctions limited vehicle permits to control congestion and pollution.
“Only if you’re very young and highly qualified would you want to rough it out in Hong Kong for a few years,” Leong said. “But once you have kids, the pollution gets to you, the lack of greenery gets to you, the crowdedness gets to you.”
Doing Business
Hong Kong is the best place to do business, according to data compiled by Bloomberg. The city of about 7 million people secured the top position in an index based on six criteria including the degree of economic integration and labor costs. Singapore ranked ninth in the index published in March by Bloomberg Rankings.
Hong Kong acts as the gateway to China, the world’s most populous nation, with free-market policies and low corporate taxes.
“Hong Kong is a very big financial center in the region and in recent years has also benefited a lot from China opening up its markets,” said Frances Cheung, a Hong Kong-based strategist at Credit Agricole CIB. Hong Kong is “about the opportunities, especially in the financial world.”
The World Bank ranks Singapore and Hong Kong top in its gauge focused on the ease of doing business. The Washington- based Heritage Foundation has named Hong Kong the world’s freest economy for 18 successive years.
Price Controls
Singapore has tightened monetary policy this year, while neighbors from Thailand to the Philippines cut interest rates, spurring gains in the currency even as the government predicts gross domestic product will rise at the slowest pace in three years.
Price gains in Singapore have reached 4 percent or more every month bar one since November 2010, more than double the 1.9 percent average in the past two decades. Inflation is forecast by the central bank to average more than 4.5 percent this year.
“A wider range of services has been developed, catering to high-end needs,” Leong said. “We’ve won the battle as the destination to live in because we’ve focused on the non- financial aspects of growth, meaning we’ve invested in greening Singapore, making it easy for families to live here.”
The increase in foreign workers has also led Singaporeans to complain that overseas workers deprive locals of jobs, drive up prices and lead to congestion on public transport. That helped opposition parties win record support in last year’s general elections and prompted the ruling People’s Action Party to slow down the intake of foreign workers.
RBC Wealth Management, part of Toronto-based Royal Bank of Canada, and EIU, a London-based unit of The Economist Group, surveyed 558 individuals who have at least $1 million of investable assets through June to October.
