[Rich Report] What Is the Economic Outlook According to the Wealthy?

Hana Financial Management Research Institute Surveys 393 PB Clients
Average Asset Holder with 16 Billion KRW, Annual Income of 477 Million KRW

[Asia Economy Reporter Kim Min-young] Wealthy individuals in South Korea expect a sluggish real economy this year but have a positive outlook on the real estate market. However, they slightly reduced the proportion of real estate in their portfolios compared to previous years.

This result was revealed in the "Korean Wealth Report" released on the 2nd by Hana Financial Management Research Institute under Hana Bank. The report analyzed survey data from 393 Hana Bank private banking (PB) clients holding financial assets of 1 billion KRW or more. Their average total assets amounted to 16 billion KRW, and their average annual income was 477 million KRW. However, the survey was conducted over about one month starting from mid-December last year, before the outbreak of COVID-19 in South Korea.

The wealthy differentiated between economic outlook and real estate. Regarding the real economy over the next five years, 54.7% responded negatively, while only 8.7% were positive. In contrast, 27.8% had a positive outlook on the real estate market. Negative outlooks accounted for only 34.7%, which is 10.6 percentage points lower than the 45.3% negative outlook in the 2018 survey.

However, due to real estate regulations, the proportion of real estate assets among the wealthy has decreased. The ratio of real estate assets to total assets was identified as 51% last year, down 2 percentage points from 53% in 2018. This is the first time in six years since 2013 that the proportion of real estate assets among the wealthy has declined.

The institute analyzed that "the causes can be found in the slowdown of real estate price increases due to strengthened real estate regulations, sales of houses by multi-homeowners, and gifts for tax savings."

Among the wealthy's real estate assets, commercial real estate accounted for the highest proportion at 48%. This was followed by residential homes for living purposes (30%), residential homes for investment purposes (14%), and land (8%).

Younger wealthy individuals had a relatively higher proportion of residential homes for investment purposes, while older wealthy individuals had a higher proportion of commercial real estate. By asset size, the proportion of commercial real estate sharply increased among high-net-worth individuals. In particular, among those with total assets of 10 billion KRW or more, the proportion of residential homes for investment purposes was only 13%, whereas commercial real estate accounted for 55%.

Researcher An Seong-hak of Hana Financial Management Research Institute explained, "The typical pattern of real estate holdings among the wealthy according to age and asset size is to accumulate wealth through various routes such as residential homes for investment purposes and then increase the proportion of commercial real estate for retirement preparation."

This content was produced with the assistance of AI translation services.