7.5% Increase in One Year... Over 9,000 People with More Than 30 Billion Won
Accumulating Assets Through Business Income Followed by Real Estate Investment
At the end of last year, the number of wealthy individuals with financial assets exceeding 1 billion KRW was recorded at 456,000, a 7.5% increase from the previous year. Seven out of ten wealthy people reside in the Seoul metropolitan area, and it was found that Korean wealthy individuals perceive themselves as rich only if their total assets exceed 10 billion KRW.
According to the '2023 Korea Wealth Report' published on the 17th by KB Financial Group Management Research Institute, these wealthy individuals held a total of 2,747 trillion KRW in financial assets and 2,543 trillion KRW in real estate assets. More than half of them believed that one must have total assets exceeding 10 billion KRW to be considered wealthy, and on average, they had the capacity to save more than 7 million KRW monthly from their total income.
As of the end of last year, the number of wealthy individuals with financial assets of 1 billion KRW or more was estimated at 456,000, accounting for 0.89% of the total population. This represents a 7.5% (32,000 people) increase from the end of 2021 (424,000 people), and the population proportion also grew by 0.07 percentage points (p). However, the annual increase in the proportion of wealthy individuals was the smallest since 2019, and the total financial assets they held (2,747 trillion KRW) decreased by 4.7% (136 trillion KRW) over one year. The decline in the financial asset size of the wealthy is the first in four years since 2019, which the institute attributes to the significant drop in stock and bond values due to last year's interest rate hikes.
When dividing the wealthy by asset size, 91.2% (416,000 people) were classified as 'asset holders' with financial assets between 1 billion and less than 10 billion KRW. 'High-net-worth individuals' with financial assets between 10 billion and less than 30 billion KRW accounted for 6.9% (32,000 people), and 'ultra-high-net-worth individuals' with financial assets exceeding 30 billion KRW made up 1.9% (9,000 people). This means that 0.02% of the entire Korean population are ultra-high-net-worth individuals.
Seven out of ten wealthy individuals (70.6%) lived in the Seoul metropolitan area, including Seoul itself. When calculating the wealth concentration index, Seongdong-gu, including Seongsu-dong, newly emerged as a wealthy neighborhood (with a wealth concentration index exceeding 1.0) for the first time, following Gangnam, Seocho, Jongno, and Yongsan districts.
The total real estate assets held by the wealthy amounted to 2,543 trillion KRW, increasing by 7.7% over one year. Due to the decline in real estate prices, the growth rate was smaller than in 2021 (18.6%) and 2022 (14.7%). The proportion of real estate assets was 60.3% for asset holders and 48.2% for both high-net-worth and ultra-high-net-worth individuals, indicating that the larger the asset size, the more balanced the holdings between financial and real estate assets.
On average, Korean wealthy individuals' assets were divided into 56.2% real estate and 37.9% financial assets. Compared to 2022 (real estate 56.5%, financial 38.5%), the proportion of real estate slightly decreased. Specifically, the order was residential real estate (30.0%), liquid financial assets such as cash (13.3%), buildings and commercial properties (11.0%), non-residential housing (10.3%), savings and deposits (9.9%), and stocks, REITs, and ETFs (6.5%). Compared to last year, the proportions of residential real estate (+2.5 percentage points) and savings and deposits (+0.4 percentage points) increased, while stocks, REITs, and ETFs (-1.4 percentage points), land and forests (-0.9 percentage points), and liquid financial assets (-0.9 percentage points) decreased.
The increase in the proportion of residential real estate despite falling housing prices is analyzed by the institute as being more influenced by the contraction of financial markets, such as the stock market downturn. Wealthy individuals indicated that if they increase investment amounts next year, they would consider savings and deposits and stocks as attractive financial investment options. Some planned to expand bond investments when interest rates are judged to have peaked.
Promising investment destinations expected to yield high returns in the future included stocks, housing, and gold/jewelry. Regarding stocks, the expected investment period was between 1 and less than 3 years, with an anticipated return rate of about 24%. The intention to invest was higher in domestic stocks (74.8%) than in overseas stocks (41.8%).
Three out of ten wealthy individuals (30.6%) had invested in or currently held art pieces. The most common maximum amount they were willing to pay per artwork was between 60 million and less than 100 million KRW (24.2%). This amount increased compared to last year's highest response rate of 10 million to 30 million KRW (27.3%). More than half (55.0%) indicated no intention to invest in fractional ownership of art in the future. Many responded that they were either unfamiliar with fractional investment (42.3%) or felt their existing investments were sufficient (37.3%).
Korean wealthy individuals consider total assets of at least 10 billion KRW necessary to be regarded as wealthy. The most frequently cited threshold for total assets to be considered wealthy was 10 billion KRW (26.7%), followed by 5 billion KRW (14.0%) and 20 billion KRW (10.7%). When grouped by amount, 49.0% considered less than 10 billion KRW, and 51.0% considered 10 billion KRW or more. This standard for wealth increased from 7 billion KRW in 2021 to 10 billion KRW and has remained the same for three consecutive years including this year.
The income source contributing most to current asset accumulation was business income (31.0%), about three times higher than earned income (11.3%). Additionally, real estate investment (24.5%) was about twice as high as financial investment (13.3%) as a means to grow accumulated assets. The 'seed money' that wealthy individuals considered necessary was 800 million KRW, which is 20 million KRW less than last year. The average age at which they accumulated the minimum seed money was 42 years, and the most common investment method was residential housing.
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