Discover Why Hong Kong Has More Millionaires Than New York Today!
A whole new league has been created in the world by Hong Kong – economy of the area has played the key role. Recent headlines have announced that this Asian urban space has surpassed New York as the city with the highest number of wealthy residents. Once a British colony, Hong Kong today has more individuals worth at least 30 million dollars than any other region in the world.
In the past year, the city has experienced a 31% surge in mega millionaires with over 10,000 residents qualifying as persons with ultra-high individual net worth. Astonishingly, about 14 percent of the population comprises of millionaires with an estimated total of 1 million millionaires out of a meager population of 7 million.
With that in mind, let us take an in-depth look at the intrigues and factors that have led up to Hong Kong’s vastly rich population and look at the question of how rich Hong Kong really is. But first here are some fast facts about this alluring territory.
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Located along the south coast of China, Hong Kong is today ranked among the richest and most beautiful territories in the world. It is officially called the Hong Kong special administrative region of the People’s Republic of China. It’s enclosed by the South China Sea and the Pearl River Delta, with vast areas of forests.
Out of the 75% of land that is not urbanized, less than half is reserved for recreation and parks while the rest is made up purely of forest cover. The 25% that is urbanized is a jungle of stone and glass complete with world renowned skyscrapers such as the highly acclaimed Nina Tower and the International Commerce Center.
This city is home to over 1500 skyscrapers taller than 328 feet, making it the city with the highest number of skyscrapers in the globe. What’s more, approximately 8000 more buildings have at least 14 floors. New York comes a distant second with only 814 skyscrapers to its name.
On the flipside, the urbanized regions of Hong Kong are densely populated with 7.4 million individuals unevenly spread out over 427 square miles. In fact, the place is so crowded that public cemetery plots are recycled. All burial sites need to be exhumed after 6 years. The government reburies or cremates any unclaimed remains once the 6-year period lapses.
It is no secret that in addition to its magnificent urban architecture, Hong Kong is also a place of natural beauty and high aesthetic value. In fact, the name ‘Hong Kong’ comes from the Hakka term referring to “a fragrant harbor’. This refers to the sweet fragrance emanating from the fresh water flowing from the Pearl River to the South China Sea through the city’s Pearl River Delta. Now let’s take a look at how this small region became so wealthy.
How Hong Kong Became Rich
In 2018, Hong Kong’s nominal GDP per capita stood at a whopping 48,517 dollars. How exactly did such a small region come to have a per capita income similar to that of arguably the greatest nation in the world, the United States, in a span of just 50 years? In the general sense, it all boils down to the city’s low taxation rates, ethical judicial system, low corruption rates, lax economic regulations, free trade, and of course, its competent leadership. Combined, these factors have allowed Hong Kong to grow from a small British Colony into one of the wealthiest regions worldwide.
After its emancipation from Britain, Hong Kong was left under Chinese rule under the concession that the government would allow the region some form of autonomy. However, Hong Kong’s special administrative powers are limited since both Britain and China still serve as benevolent dictators to the region. Nonetheless, the city retained much of its economic freedom.
With limited natural resources within Hong Kong, the majority of the local residents and escaped refugees from communist China turned to trade and production as a way of exploiting the free trade agreements and lax regulations. This combined with the cheap labor that was previously available in the region especially from the refugees led to the population of Hong Kong gradually accumulating wealth.
It became a trading hub where entrepreneurs would set up shop for the production and distribution of sophisticated goods. Today, Hong Kong is one of the most essential financial centers in the world and boasts of a very forward high-tech service economy.
This thriving economy is largely attributed to the huge import/export industry in Hong Kong. For decades, the region was ranked among the top exporters of garments and textiles in the world. Despite trade disagreements with leading states such as Britain in 1959, Hong Kong has maintained a steady rise in GDP from the early 1950’s to date.
The only exceptions include negative GDP shocks in the late 1960’s due to the PRC Cultural Revolution, the mid-1970s due to the global oil crisis, and the early 1980’s due to political upheaval emanating from change of political leadership from Britain to China. This graph shows this gradual but steady rise in GDP with the exception of these periods. (Source: https://eh.net/encyclopedia/economic-history-of-hong-kong/)
Why the Rich Are Drawn to Hong Kong
For decades Hong Kong has been a happy hunting ground for financial heavyweights. To a large degree, this is caused by the fact that Hong Kong remains a gateway to China. It is a hub for international businesses within China and home to numerous trading and networking opportunities. Its geographical location also contributes immensely to this mix as it is the main pathway through which people access the gigantic mainland market in China.
More importantly, starting a business in Hong Kong is relatively easy and quite cost-effective. For that reason, there are hundreds of thousands of start-ups and conglomerates in this tiny territory. According to local laws, foreigners are allowed to own 100% of a business from any industry, as is the case with local residents. There are no nationality requirements. Besides, it is ranked among the least corrupt regions worldwide and has been the freest economy for the last 20 years or so. Evidently, it is a haven for financial elites.
With China being the second largest economy in the world, Hong Kong also benefits from its growing trade connections and expansive links in the investment sector. And plans are still underway to further link Hong Kong and China with an aim of firming both regions’ grip on the global market. For instance, the Great Bay Area plan is designed to connect 9 mainland cities in China to Hong Kong. Ultimately, this strategy will help boost innovation and economic growth.
Essentially, this city’s economic past has been bright, but the future seems to be brighter! Thus, entrepreneurs from across the globe continue to flood into the area with an aim of expanding their portfolios into one of the most profitable markets in the world. This has created another very profitable sector in the region.
Real Estate in Hong Kong
Hong Kong is a leader in international business that seems to be nearing economic perfection. As we already mentioned, this is brought about by the favorable market conditions in the city that allow entrepreneurs to conveniently set up shop within its boundaries. So the majority of Hong Kong’s richest have made a killing from the city’s real estate industry. As of 2018, the region was ranked as having the priciest real estate market with rates 19 times the international median annual income.
For 5 years straight, the city’s average home price has been 1.2 million dollars. By virtue of being the least affordable real estate market, it qualifies as the most profitable in the world. This has made it a favorite among real estate investors from all over the globe.
Plans are underway to rectify these soaring figures in a bid to make the real estate prices more inviting to people from all walks of life. However, the most anyone can expect is a 20% reduction in prices. This would be a drop in the ocean for the most expensive world market.
Real estate entrepreneurs and government officials have realized that the extremely high prices limit people from engaging in this market. These plans are, therefore, aimed at creating opportunities for struggling buyers to hop on to the property ladder. Either way, real estate prices will still remain way above the majority’s pay grade. It seems this is a market reserved for business elites. Now let’s get to our main question of the day.
How Wealthy is Hong Kong
So, all these factors considered, exactly how wealthy is Hong Kong? As per recent statistics, this city is ranked as a high-income economy. This is due to its annual nominal GDP of 363 billion, inflation of 2.4%, a total foreign reserve count of $431 billion, and revenues amounting to $79.3 billion. A 2017 report by Wealth-X shows that Hong Kong has the highest number of ultra-high net worth individuals with an estimated 10,000 residents with investible assets of at least 30 million dollars, not including property and personal assets.
Before 2017, New York City had claimed the title of most ultra-high-net-worth individuals every year since the first report was produced in 2011. Now New York comes in at second place with 8,900 residents, and Tokyo is a distant third with 6,800. Moreover, this figure is expected to rise in Hong Kong by 8.3% every year thanks to the wealth creation based on its ‘fertile’ markets.
It is also ranked among the top 10 billionaire cities in the world alongside other Chinese cities such as Shenzhen and Beijing. There are 93 billionaires in Hong Kong, more than any European city. Combined, these ultra-wealthy Hong Kong residents have created a favorable environment for economic and stock market growth largely due to the excessive flow of money within the city.
As of 2018, a whopping 31.5 trillion dollars was in circulation in the Hong Kong stock market, which is testament to its thriving economy. Therefore, this alluring city comfortably qualifies as one of the fastest growing cities for multimillionaires and billionaires in the world. According to reports, this economic growth will go a long way in helping Hong Kong and other Asian cities close the gap with other regions.
There is no question that Hong Kong is one of the wealthiest cities in the world. There are several superlatives that attest to this fact: it has the highest number of skyscrapers, it has the freest business market, it has the highest number of wealthy residents, the most expensive real estate market, and the most effective subway system. And this city has achieved all this in a spun of only 50 years. Today, its economy rivals that of the greatest nations in the world, including the United States.
The only flip-side is that the general cost of living is a tad bit high compared to other regions, especially property rates. Nevertheless, it is ranked seventh in terms of the human development index, which shows that quality of life in the city is not greatly affected by this fact. Essentially, it makes for a perfect investment location for those looking to further diversify their already extensive portfolios.
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We would like to wrap things up with a simple question. Would you consider starting a business in Hong Kong or would the high cost of living drive you somewhere else? Let us know what you think in the comments.