Hong Kong’s affluent become millionaires by the age of 33: HSBC survey

Hong Kong’s affluent become millionaires by the time they turn 33 on average, according to an annual survey by HSBC, which also found that respondents were confident about reaching the next milestone of HK$10 million (US$1,277,164) by age 62.

But they are hesitant about using real estate as a means of protecting their capital, with the ongoing downturn making them wary about ploughing money into one of the most expensive markets in the world.

The HSBC survey, which covered a sample of 1,098 respondents aged between 24 and 64 years, with liquid assets of HK$1 million or more, found a sharp decline in respondents who favoured property as a store of wealth, with more than half expecting a decline in prices in the coming year.

“Only half of the respondents endorse the wealth protection power of property, down 23 percentage points from last year’s survey,” HSBC said in a statement.

The survey found that as many as 57 per cent of the respondents expect a correction in the city’s home prices in the next 12 months. “Three quarters also foresee no improvement or even deterioration in the local economy for next year,” the statement said.

More than 60 per cent of the people surveyed relied on savings from their salary to accumulate their first HK$1 million, rather than from other sources such as profit from investments.

“There are no proven formulas for building wealth,” said Sami Abouzahr, head of investments and wealth solutions at HSBC, Hong Kong. “Early planning, regular saving, disciplined investing and diversification are the core solutions for clients across the wealth continuum.”

Sluggish macroeconomic conditions and investment environment have been the predominant challenges for most Hong Kong investors in their bid to reach the HK$10 million milestone. Other major impediments include wrong investment decisions, unexpected expenses and career or salary bottlenecks.

About 6 per cent of the city’s affluent have already hit the HK$10 million mark by the age of 45, and 70 per cent of those whose portfolio hit the HK$10 million mark earlier than the age of 62, had deployed their cash in financial assets.

In comparison, their counterparts with liquid assets of less than HK$10 million had kept over 40 per cent of their cash in risk-free deposits.

The doom-and-gloom outlook had not completely undermined the perception that property is an indispensable tool for wealth building and legacy planning. Up to 44 per cent of surveyed parents will financially support their children in home purchasing, with a plan to give them HK$1.93 million on average.

Some 40 per cent of these parents will help their children buy property when they get married, while 25 per cent intend to do so on or before their children turn 18.

Additionally, property is just behind cash as the most popular asset for wealth transfer to spouses, children and grandchildren. On average, surveyed parents intend to leave behind 1.3 properties for each of their children.

Legacy planning extended beyond the next generation. According to the survey, up to 54 per cent of respondents consider grandchildren as “one of the puzzle pieces in wealth succession”. Although most respondents value legacy planning, only 25 per cent have already started working on their plans.