Yachting continues to be the top leisure choice for privacy and an opportunity to spend quality time with family and friends for ultra high net worth individuals (UHNWIs), especially in the Pacific region, shows a Wealth-X-Knight Frank 2016 survey of UHNWIs.
The survey covered UHNWIs who own at least one of the following luxury assets – yachts, private jets, collectables (fine wine, antiques, art, jewellery and watches) and a luxury automobile worth more than $100,000.
“Currently, North American UHNWIs are below the global average for yacht ownership. However, due to the high levels of wealth in the US we expect ownership to increase. In Asia, there tends not to be such an affinity with the sea, compared with countries in the Pacific and Europe. We see this as one reason for the lower proportion of Asian yacht owning UHNWIs,” states the report.
UHNWIs in Africa and Latin America showed a much stronger propensity for private jet ownership (2.0x and 1.59x respectively) than the global average, shows the survey. The report says that the high demand for private jet ownership is due to poor commercial travel infrastructure and significant travel distances between business hubs.
The luxury spending index highlights that, within Africa, the number of UHNWIs with a luxury automobile is 1.55x the global average. Although wealth in Africa is extremely concentrated in certain countries, the report finds that there is a growing potential for luxury brands including high-end auto marques.
Despite the ongoing difficult economic conditions in many emerging markets, the appetite of wealthy collectors hasn’t diminished. If anything, during periods of economic uncertainty, many wealthy individuals in emerging markets look for tangible investments such as paintings (particularly the contemporary, modern and impressionist genres), which will appreciate in value, as opposed to luxury clothing and leather accessories.
The luxury spending index shows that UHNWIs in Europe are almost twice as likely to own a collectable compared with the global average. UHNWIs in Asia and Latin America, however, are below the global average.
Here are the latest trends driving UHNWI spending patterns and the global market for luxury goods:
Luxury Automobile
In order to navigate the intricacies of doing business in emerging markets such as Africa, brands will have to re-calibrate their product offerings. Top-end marques such as Bentley release off-road models more suited to rougher roads. Appealing to a rapidly growing and youthful population heavily influenced by the strength of the continent’s online community is also key for luxury marketers to get right.
Private Jets
Private jet ownership levels are very low in Asia, despite the region’s strong economic growth in recent years. Under‑developed infrastructure, lack of qualified professionals and stringent civil aviation regulations in important markets such as China are contributing factors for the low private jet ownership. However, the industry continues to watch the region in order to capitalize on rapid wealth growth. The entry of fractional ownership operators into China may boost demand, says the report.
Luxury Collectables
As individuals in emerging markets become wealthier, the report predicts the numbers of collectors to increase. Not only do collectables represent a safe asset investment, they are a way of illustrating status and a sense of having ‘arrived’. Last year, the world’s top 200 art collectors came from 36 countries, compared with 17 in 1990. Many of these were emerging markets such as China and Brazil (Art News).
