The Hurun Research Institute and Visas Consulting Group jointly published a report –on its third year- on Immigration and the Chinese HNWI. The 2016 report features a bespoke index on the Most Suitable Countries for Emigration and a bespoke list of the Preferred Cities to Buy Houses and Emigrate to.
The USA led for the second year of the index, followed by the UK, which held onto second place despite Brexit. Canada was third, followed by Australia and Singapore. The Republic of Ireland broke into the Top 10 for the first time, shooting straight into sixth place. Six of the Top 10 are European countries.
Overseas property purchases are most popular form of overseas investment. The West Coast of America is the most attractive destination for Chinese HNWI to settle in, particularly Los Angeles, San Francisco and Seattle. Rupert Hoogewerf, Chairman and Chief Researcher of Hurun Report, said “Seattle has been shooting up the rankings of Preferred Destinations for Chinese HNWI for the second year in a row, even surpassing New York to break into the top three this year.”
Over the next three years, 60% of HNWIs intend to invest in overseas property. Rupert Hoogewerf said: “China currently has 1,340,000 high net worth individuals, defined as individuals with US$1.5m, so that means we are looking at a massive 800,000 individuals who want to buy property overseas over the next three years.”
International Asset Allocation
More than half of the HNWI are concerned about the depreciation of the yuan, with other prominent concerns including the US dollar exchange rate and overseas asset management. Rupert Hoogewerf said, “The trend this year goes beyond emigration to global asset allocation. For rich Chinese today, the target is to have one third of their wealth overseas. Buying houses and foreign exchange deposits lead the way.”
Overseas financial investment accounted for 15% of the wealth of the individuals surveyed. Rupert Hoogewerf said, “The main reasons for investing overseas are to spread their investment risk, children’s education and with emigration in the back of their minds.”
When investing overseas, asset safety is the top priority. 64% chose ‘risk control’ as their foremost consideration. Foreign exchange deposits are the investment of choice, at 31%, followed by funds with 15 and insurance accounting for more than 10%. Rupert Hoogewerf said, “For Chinese HNWIs today, their investments overseas are conservative nest eggs, not risk capital.”
Eight out of ten HNWIs have ‘passion investments‘, with the two most popular ones, paintings and watches, accounting for 24% and 16%. Stamps (7%), wine (4%) and classic cars (2%) are other popular options. Compared with last year, the proportion investing in painting showed a considerable increase, up 33%, while wine investments fell by 2%.
Chinese Immigrants Index
This index considers the most suitable countries for Chinese high net worth individuals to emigrate to, taking into consideration a basket of eight factors, including education, ease of investment, immigration policy, property investment rules, taxation, medical care, visas and ease of adaptation for Chinese emigrants.
Preferred Destinations for Emigration and Overseas Property Purchases
The report draws on a survey of around 300 Chinese high net worth individuals (HNWIs), carried out between August and October 2016, with average wealth of 27 million yuan, who have either emigrated or considered emigrating. A Chinese high net worth is defined as a family with net wealth of 10 million CNY, equivalent to US$1.5 million.