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April 2016

Global Wealth Forecast: New Money, Same Tastes

The next decade and beyond will see many changes in who holds the world’s wealth, how they acquire it, and what they do with it.

Old Money

Individuals who have inherited their wealth favor investing their money in luxury residential real estate. According to the recent Decades of Wealth report by Wealth-X, ultra-high-net-worth individuals with inherited wealth hold 17% of their wealth in high-end residential real estate. This figure is only 9% for self-made UHNWIs. This trend is likely to continue as Baby Boomers age and pass their wealth on to younger generations. In the next decade alone, global UHNW individuals will bequeath $4.1 trillion in wealth to the next generation. An estimated 30% of this projected wealth transfer will be in liquid assets.

The number and nationality of individuals with inherited wealth is shifting. In North America and Western Europe, for example, the past decade has seen a decline in the number of wealthy individuals with “old money.” The opposite trend can be observed in developing nations where most of the wealth is brand new: the first big wave of new wealth is being passed down to the next generation.

New Money

According to the World Wealth Report, the global HNWI population grew by 6.7% in 2014 and the group’s total wealth grew by 7.2%, resulting in an estimated HNWI population of 14.6 million.

  • The HNWI population in China grew by 17% in 2014. China continues to experience economic prosperity and a growing upper economic class, the older generation of which is now passing its wealth on to the next generation and investing in foreign economies.
  • Over the past year, the number of millionaires in India grew by 27% and their HNWI population grew by 26% in 2014. According to Wealth-X, “Aligned to this wealth growth is an equally substantial increase in luxury consumption.”
  • African nations. As entrepreneurial and tech-centric countries such as South Africa, Kenya, Nigeria, and Uganda continue to experience increased economic prosperity and innovation, they are catching the attention of foreign investors—particularly wealthy Chinese nationals. Wealth-X projects that Africa’s UHNW population will quadruple by 2040.

AprilBlog

Globalized Taste

In their Decades of Wealth report, Wealth-X wrote, “China is often cited as a market that has surprised observers with the speed of its move from conspicuous consumption to careful, tasteful purchasing.” With the globalization of media and entertainment—and, as a result, trends and lifestyles—the world’s new wealthy are expected to follow in China’s footsteps by becoming discerning consumers with refined tastes—including a taste for luxury residential real estate. Roughly 80% of the world’s UHNW population own 2 or more residences, and it is becoming increasingly popular for UHNW individuals to invest in unique and exotic luxury homes outside of their home country. The United States remains the most popular destination for wealthy individuals seeking a place to invest in real estate


Luxury Bathroom Trends: TOTO Washlet

Even in the most extravagant homes, in which no expense is spared to make the homeowner and their guests feel pampered, Americans have historically deprived themselves of the ultimate in household luxury: heated, remote-controlled toilet seats with a built-in bidet feature. While the concept may seem too bizarre (or too indelicate) to those with American sensibilities, it is estimated that roughly 76% of households in Japan have such a technologically advanced toilet seat. In fact, the Japanese government tracks the popularity of electronic bidet seats as an indicator of economic prosperity. This luxury bathroom accessory is also used widely throughout Asia and the Middle East, and is even disrupting the market for traditional bidets in Western Europe. Although their use in the United States has mostly been limited to luxury hotels and a small cult following, the electronic bidet seat seems to be taking root.

TOTO, the largest plumbing manufacturer in the world, has sold more than 40 million Washlets, its brand of electronic bidet seat, since launching the product in Japan in 1980. Although only a few thousand Washlets are sold each month in the United States, TOTO’s U.S. sales figures have increased by 20% in each of the last five years.

TOTO

Why A Washlet?

In a recent press release announcing their huge sales success, TOTO described the revolutionary accessory: “Washlets use pure, clean water – and myriad technological innovations – to make their users cleaner, happier, more refreshed than they have ever felt after a bathroom break by reinventing the humble toilet seat as a warm water personal cleansing system.” And Toto seems to have succeeded in making its users happier. People who have had the pleasure of sitting atop a Washlet typically respond with rave reviews. In “The Cult of the Toto Toilet,” for example, The Times interviewed the owner of a Manhattan plumbing showroom who said that going back to a regular toilet seat would be like “going back to the Stone Age. It feels very uncivilized.”

Depending on how advanced an individual wants their electronic bidet seat to be, a TOTO Washlet can cost anywhere from $1,000 to almost $10,000. In addition to the standard features—heated seat, bidet wand, remote control—more high-end models might include UV light technology that kills bacteria and other cleansing functions to keep the luxury bathroom clean and fresh.