1. 2012
A GLOBAL PERSPECTIVE ON PRIME
PROPERTY AND WEALTH

2. THE WEALTH REPORT 2012
Written by Knight Frank Research
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Citi Private Bank by Think Publishing
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3. 2012
A GLOBAL PERSPECTIVE ON PRIME
PROPERTY AND WEALTH

4. THE WEALTH REPORT
A GLOBAL PERSPECTIVE ON PRIME PROPERTY AND WEALTH
4
CONTRIBUTORS
ANDREW SHIRLEY
Andrew edits The Wealth Report
and Global Briefing, Knight
Frank’s prime property blog
GRÁINNE GILMORE
Gráinne was an economics
correspondent at The Times
before joining Knight Frank’s
Residential Research team
VICKI SHIEL
WELCOME
Vicki, a former journalist, is
a member of Knight Frank’s
Residential Research team
LIAM BAILEY LIAM BAILEY
N
Liam is Head of Knight Frank’s HEAD OF RESIDENTIAL RESEARCH, KNIGHT FRANK
Residential Research team and
is a leading authority on global
prime property markets ever before have wealth creation, economic risk and politics been so
closely intertwined with the performance of prime residential and commercial
JAMES ROBERTS property markets. Drawing on insight from Knight Frank, Citi Private Bank and
James is Head of Knight Frank’s other leading commentators, The Wealth Report 2012 pulls together all these
Commercial Research team strands and explains their connections and likely implications.
and specialises in prime global Using exclusive data and survey results, we uncover how the wealth being
office markets generated by the world’s fastest growing economies is an integral part of the
equation, but also discover on page 16 that economic growth alone is not enough
ILLUSTRATIONS BY to create cities considered genuinely important by the world’s wealthiest people.
ADAM SIMPSON The central trend dominating prime
Adam has contributed to major property markets has been the relentless
exhibitions in London, New York, growth of “plutonomy” economics, a The central trend
Bologna and Japan. Included
in the 2009 Art Directors Club
phenomenon that sees the wealth of the
richest 1% growing far quicker than that of
dominating the
Young Guns awards the general population – a trend we initially performance of
examined in our first Wealth Report in 2007.
A year later, in the eye of the global
prime property
economic storm, plutonomy seemed under markets has been the
DEFINITIONS threat as asset values plummeted. Ironically
relentless growth of
the response to the financial crisis did more
HNWI to revive the value of investments held by “plutonomy” economics
For the purpose of this report we the wealthy than improve the position of the
use HNWI as an abbreviation for wider population. Gráinne Gilmore’s article
high-net-worth individual. Unless on page 10 of this year’s report highlights
otherwise stated, we define this growing political concerns about the
as someone having over $25m of potential effects of income inequality.
investable assets. My own analysis of prime residential
property on page 26 points to the growing interest in wealth accumulation
PRIME PROPERTY and wealth flows, both in the countries leading economic expansion in the
A location's most desirable, and emerging world, and also across Europe and North America where this money
usually most expensive, property. is increasingly being invested. In addition, our annual Attitudes Survey provides
Commonly, prime markets have a a unique insight into HNWI investment and spending trends. The results are
significant international bias. featured throughout the report and there is a detailed regional breakdown on
page 64 of Databank.
I hope you find our annual update on prime property and wealth both
interesting and useful. If Knight Frank or Citi Private Bank can be of further help
please do get in touch. You can find our contacts at the back of the report.

5. THE WEALTH REPORT 2012
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5
CONTENTS
MONITOR
PAGES 6-23
Our map of the latest concentrations of global mega-wealth reveals that the momentum is undeniably
with the world’s emerging economies. However, when it comes to choosing a home, it’s the familiar
places that are still drawing the super-rich.
PERFORMANCE
PAGES 24-45
Prime housing markets around the world have had a mixed year, but safe-haven locations are proving
resilient. They are also attracting commercial investors.
PORTFOLIO
PAGES 46-57
In light of ongoing global political and economic turmoil, the super-rich are thinking long and hard
about how best to invest and safeguard their wealth. Many are looking to combine business with
pleasure by investing in art, wine and sport.
DATABANK
58
CONTACTS
66
KEY
Throughout The Wealth Report we have used these symbols to signpost readers to content that draws
on our Attitudes Survey of HNWIs, our PIRI index of global prime property markets and
HNWI interviews.
Attitudes PIRI
Survey 2012
ATTITUDES SURVEY PRIME INTERNATIONAL WEALTH TALK
What the wealthy think about RESIDENTIAL INDEX Exclusive insight from leading
everything from property The ultimate guide lights and trendsetters in the
to philanthropy to the best prime residential world of wealth
property globally

7. THE WEALTH REPORT 2012
KNIGHTFRANK.COM | CITIPRIVATEBANK.COM
3
MONITOR
GLOBAL WEALTH DISTRIBUTION AND LOCATIONS
FAVOURED BY THE SUPER-RICH EXPLORED
Q
How and why is the distribution of global
wealth changing?
Which cities do the wealthy consider the
most important?
How are luxury brands targeting
emerging economies?
8 14 22
WEALTH FLOWS SLICK CITIES LIFE’S LUXURIES
We investigate the The Wealth Report reveals Emerging economies are
emerging centres of wealth the cities that really matter hungry for luxury, says
across the world to HNWIs Cartier boss

8. MONITOR
GLOBAL WEALTH DISTRIBUTION AND LOCATIONS FAVOURED BY THE SUPER-RICH
8
RISE
PREDICTED INCREASE
IN CENTA-MILLIONAIRES
2011-2016
OF THE
UNITED
+23%
STATES
NEW
RICH +59%
BRAZIL
THE DISTRIBUTION OF THE
WORLD’S SUPER-RICH IS
SHIFTING. GRÁINNE GILMORE
SEEKS OUT FUTURE GLOBAL
WEALTH HOTSPOTS AND
DISCOVERS IT’S NOT ALL
ABOUT CHINA
ECONOMIC CENTRE OF GRAVITY INCREASE IN CENTA-MILLIONAIRES BY GLOBAL REGION
GLOBAL NORTH LATIN
AMERICA AMERICA
+29% +6% +67%
2006-
2011
+7% +6% 0%
2010-
2011
+37% +24% +60%
2011-
2016
1980 2012 2050 5,000
8,000
London School of Economics professor Danny Quah has calculated that the world’s 17,000
economic centre of gravity – the average location of economic activity by GDP – is on 21,000
the move. By 2050, the steady rise of emerging economies in Asia will have pushed the
theoretical centre of gravity modelled by Professor Quah from its location in 1980 in
the Atlantic Ocean to somewhere between China and India by 2050. He predicts that
political influence will follow a similar trajectory eastwards.
SOURCE: GLOBAL ECONOMY’S CENTRE OF GRAVITY, QUAH (2011)
63,000
86,000
= 1,000 centa-millionaires, 2011 2016
Centa-millionaire = $100m disposable assets

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9
+76%
RUSSIA
UNITED
+44%
KINGDOM
+9%
SWITZERLAND
+106%
CHINA
+114%
INDIA
+15%
JAPAN
UNITED
+25%
ARAB EMIRATES
+65%
HONG KONG
+67%
SINGAPORE
SOURCE: LEDBURY RESEARCH
WESTERN EASTERN AFRICA MIDDLE SOUTH & SOUTH- HNWI POINT OF VIEW
EUROPE EUROPE EAST CENTRAL ASIA EAST ASIA MAIN THREAT TO YOUR WEALTH?
-7% +50% 0% +100% +200% +80% The ongoing global financial crisis
+8% 0% 0% 0% 0% +13% SINGAPOREAN
+7% +67% 100% +50% +100% +44% Regional war MIDDLE EASTERN
Nationalisation of land ZAMBIAN
3,000 1,000 2,000 3,000
5,000 2,000 3,000 6,000 Inflation INDIAN
14,000
15,000
A hostile takeover or the government
18,000 RUSSIAN
26,000
$39.9
TOTAL NET WORTH OF
CENTA-MILLIONAIRES 2011 The devaluation of money
HONG KONG
For more
survey results
and investor
intelligence, turn
TRILLION
to Databank on
p58

10. E
MONITOR
GLOBAL WEALTH DISTRIBUTION AND LOCATIONS FAVOURED BY THE SUPER-RICH
10
conomic turbulence GRÁINNE GILMORE HEADING EAST
failed to curb the rise in the number of ultra-wealthy Head of UK Residential Our global HNWI data also indicates a shifting emphasis
individuals last year, according to exclusive new figures Research, Knight Frank to the East. There are now 18,000 centa-millionaires in
produced for The Wealth Report. the region covering South-East Asia, China and Japan.
There are now 63,000 people worldwide with $100m This is more than North America, which has 17,000, and
or more in assets, according to Ledbury Research, which Western Europe with 14,000.
specialises in monitoring global wealth trends. The By 2016, Ledbury Research expects that this
number of these centa-millionaires has increased by region will have extended its lead, with 26,000 centa-
29% since 2006 and is forecast to rise even further (see millionaires, compared with 21,000 in North America
graphic, p8). and 15,000 in Western Europe.
But HNWIs were not spared On a country-by-country basis, the US will still
from the challenges that dominate in 2016, with 17,100 centa-millionaires, but
faced all investors across the While rapid GDP China will be catching up fast with numbers set to
globe last year. Amid growing
economic and political tensions,
growth does not in double from current levels to 14,000.
“We believe the number and concentration of centa-
manifested most clearly in the itself guarantee a rise millionaires accentuates the trajectory of current global
eurozone crisis and the Arab
Spring uprisings, many world
in HNWIs, rapidly wealth flows,” says James Lawson, Director at Ledbury
Research. “Trends seen in this wealth bracket are likely
stock markets fell sharply. growing economies do to be replicated in lower wealth tiers in years to come.”
Commodity prices were also
volatile and the growth in
provide opportunities South-East Asian deca-millionaires (those with $10m
or more in assets) already outnumber those in Europe,
average global real estate values for wealth creation and are expected to overtake those in the US in the
slowed – with the exception of coming decade.
localised out-performance in These forecasts are influenced by the expected
some markets (see our Prime economic performance of countries in the Asia-Pacific
International Residential Index, region. While rapid GDP growth does not in itself
p26, and our commercial guarantee a sharp rise in HNWIs, rapidly growing
property trends report, p36). economies do provide key opportunities for large-scale
The global economy expanded, but the pace of wealth creation.
growth was much slower than in 2010. The US economy “Individuals can become millionaires or multi-
grew by just 1.8% and GDP in the troubled eurozone millionaires through saving their earnings, a trend most
rose just 1.6%. In contrast, Asia managed to chalk up commonly seen in more developed and established
economic growth of 7.9%, although even this was down economies. But, apart from those who inherit wealth,
on the 9.5% achieved 12 months earlier. most people who are very wealthy, say with assets of
The London School of Economics professor Danny $10m or more, are business owners,” Mr Lawson says.
Quah forecasts that by 2050 the world’s economic centre “To amass this sort of wealth means there must be an
of gravity, a theoretical measure of the focal point of alignment between opportunity and ability. For those
global economic activity based on GDP, will have shifted who make more than $50m, the opportunity usually
eastwards to lie somewhere between China and India arises because of a major liquidity event, and these are
(see map, p8). Professor Quah calculated that in 1980 it more common, and can be tapped into more readily, in
was in the middle of the Atlantic. fast-moving economies.”

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11
Singapore:
highest GDP
per capita now
and in 2050
JOSEF HOFLEHNER / GALLERYSTOCK
TABLE 1 TABLE 2 TABLE 3
THE WORLD’S LARGEST ECONOMIC GROWTH GDP PER CAPITA
ECONOMIES 2010 - 2050
2010 GDP $tn 2050 GDP $tn TOP 10 % BOTTOM 10 % 2010 $US 2050 $US
1 US 14.12 1 India 85.97 1 Nigeria 8.5 1 Spain 2.0 1 Singapore 56,532 1 Singapore 137,710
2 China 9.98 2 China 80.02 2 India 8.0 2 France 2.0 2 Norway 51,226 2 Hong Kong 116,639
3 Japan 4.33 3 US 39.07 3 Iraq 7.7 3 Sweden 1.9 3 US 45,511 3 Taiwan 114,093
4 India 3.92 4 Indonesia 13.93 4 Bangladesh 7.5 4 Belgium 1.9 4 Hong Kong 45,301 4 South Korea 107,752
5 Germany 2.91 5 Brazil 11.58 5 Vietnam 7.5 5 Switzerland 1.9 5 Switzerland 42,470 5 US 100,802
6 Russia 2.20 6 Nigeria 9.51 6 Philippines 7.3 6 Austria 1.8 6 Netherlands 40,736 6 Saudi Arabia 98,311
7 Brazil 2.16 7 Russia 7.77 7 Mongolia 6.9 7 Netherlands 1.7 7 Australia 40,525 7 Canada 96,375
8 UK 2.16 8 Mexico 6.57 8 Indonesia 6.8 8 Italy 1.7 8 Austria 39,073 8 UK 91,130
9 France 2.12 9 Japan 6.48 9 Sri Lanka 6.6 9 Germany 1.6 9 Canada 38,640 9 Switzerland 90,956
10 Italy 1.75 10 Egypt 6.02 10 Egypt 6.4 10 Japan 1.0 10 Sweden 36,438 10 Austria 90,158
GDP ($tn) by purchasing power parity (PPP) % GDP change year on year 2010 PPP US$
SOURCE: GLOBAL GROWTH GENERATORS, CITI INVESTMENT RESEARCH AND ANALYSIS, 2011

12. MONITOR
GLOBAL WEALTH DISTRIBUTION AND LOCATIONS FAVOURED BY THE SUPER-RICH
12
PERCENTAGE
COMPOSITION OF
WORLD GDP
1950-2050*
28%
29% 10%
28%
26% 9%
10% 24%
14% 27% 44%
25%
2% 10% 49%
8%
19%
22%
4% 3%
8% 8%
4%
4% 3% 11%
3% 9% 15%
4%
4%
2% 7% 4%
195 4% 7%
0 9%
ia g
11%
As opin
4%
4%
el
ev
pe D
1% 8% 4%
ro rn
4%
Eu ste
Mr 197 27%
e
8%
ica W
0
3%
er h
Lawson 4% to 49% in
Am ort
N
1% 7% 5%
adds: “Just 199 6% 2050. China
S
CI
0 8%
looking at the 12% will overtake
Ea dle
3%
id
1%
st
M
wealthiest in some 201 the US to become the
0 3% Am atin
ica
L
emerging markets, you can er world’s largest economy
2%
a
ric
1%
Af
see the sectors where they are 203 by 2020, which in turn will
Eu ster nd
0 2%
a
Ea ral
generating their wealth include natural be overtaken by India in 2050
ro n
nt
Ce
pe
resources, manufacturing or construction.” 1% (see Table 1, p11).
an
d Jap
205
0
al d
Ze an
Willem Buiter, Citi’s Chief Economist, agrees: Citi research shows that while China and
w lia
an
Ne stra
Au
“As part of the process of fast economic growth, vast India are likely to grow rapidly over the next 40
wealth will be created. The distribution of that wealth years, there are other key countries with promising
will be dictated by political factors as much as the chances for growth that do not necessarily match the
economic process itself, but there will be high returns traditional assumptions about where future growth will
from investment in skills and education.” emanate from.
For example, Russia and Brazil, which make up the
NEW WORLD PLAYERS
*SOURCE: GLOBAL GROWTH GENERATORS, CITI INVESTMENT RESEARCH AND ANALYSIS, 2011
so-called BRIC nations alongside China and India, do not
9
HNWI FEARS
While there is little doubt that the emerging economies FUTURE WEALTH make it on to Citi’s list of Global Growth Generators – or
present the best chances for economic growth, not all CREATION “3G” countries (see commentary, opposite and Table 2,
countries will prosper at the same rate. p11). Instead, Citi includes countries such as Bangladesh,
Indeed, the International Monetary Fund (IMF) % Egypt, Indonesia, Iraq, Mongolia, Nigeria, Philippines,
recently warned of the possibility of a “hard landing” Sri Lanka and Vietnam on this list.
for some emerging economies if the effects of buoyant “All of these countries are poor today and have
credit and asset price growth, which have fuelled decades of catch-up growth to look forward to. Some of
consumer demand in recent years, unwind. OF ASIA-PACIFIC them, including Nigeria, Mongolia, Iraq and Indonesia,
The IMF predicts emerging economies will expand by HNWIs PESSIMISTIC also have large natural resources that we hope will be
5.4% this year and 5.9% next year. While this certainly more beneficial than they so often have been in the
marks a significant downgrade from previous forecasts, past,” Mr Buiter says.
it still outpaces the average GDP growth of 1.2% and Mexico, Turkey, Thailand and Iran are also
1.9% expected this year and next in advanced economies.
“Many poor economies have opened up and reached
36% mentioned as countries to watch, as is Brazil, although
Citi says major fiscal or political adjustments would
the modicum of institutional quality and political have to take place before they would be eligible to join
stability that are needed for fast growth and rapid catch- the 3G list.
up,” Mr Buiter says. OF EUROPEAN While these countries can expect rapid economic
This, in turn, will mean an end to Western hegemony HNWIs PESSIMISTIC growth, much of the wealth already held in developed
in terms of output (see chart above). Citi forecasts that economies will be maintained, according to Citi.
For more
the North American and Western European share of survey results Measuring a country’s affluence in terms of GDP per
world real GDP will fall from 41% in 2010 to just 18% in and investor capita shows that Singapore currently tops the chart,
intelligence turn
2050. Developing Asia’s share is expected to rise from to Databank
with Norway and the US in second and third place
on p58

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13
GLOBAL GROWTH
GENERATORS
WILLEM BUITER
Willem Buiter explains why acronyms
such as BRIC are no longer relevant
when discussing the world’s fastest
growing economies
Citi has created a new way of
expressing the key drivers of global
growth and investment opportunities.
The term “Global Growth Generators”,
or 3G, describes countries, regions, cities,
trade corridors, sectors, industries, firms,
technologies, products and asset classes
that over the next five, 10, 20 and 40 years
are expected to deliver high growth and
respectively (see Table 3, p11). By 2050, Singapore is WILLEM BUITER profitable investment opportunities.
expected still to be in the top spot, with Hong Kong and Citi’s Chief This change in terminology is necessary
Taiwan moving up to take the second and third places. Economist because it points to a different approach to
But the US, Canada, UK, Switzerland and Austria will all thinking about the future drivers of growth
still be in the top 10, although the US will have dropped and investment potential around the
down to fifth place in the overall rankings. world. It is particularly useful now because
catchy acronyms and labels have spawned
UNCERTAIN FUTURES unhelpful taxonomies of countries and
In terms of continued wealth creation, the world’s become obstacles to clear thinking about
HNWIs remain upbeat. Less than a quarter are future growth and profit opportunities.
pessimistic about their future wealth prospects, Developing/emerging versus
according to the results of developed/advanced/mature economies,
The Wealth Report 2012 BRIC, the Next Eleven, the 7 Percent Club
Attitudes Survey. The dissatisfaction are no more helpful concepts for Citi’s
global client base than the Magnificent
However, Tina Fordham,
Senior Global Political
with income inequality Seven or the Nine Nazgûl.
Analyst at Citi, warns that the already being It is also worth noting that the
expression “Global Growth Generators”
dissatisfaction with income
inequality already being
manifested in the is not simply a new name or label for the
manifested in the Occupy Occupy Wall Street same collection of countries currently
known as “emerging markets” (EMs).
Wall Street demonstrations
will gain momentum, and
demonstrations will Indeed, we hold the view that some
that there could be a long- gain momentum countries currently in the emerging market
term recalibration between category are not necessarily among the
governments, businesses and future global growth generators. And in
society as a result. “It could take principle, there could be countries that are
a decade or longer for the ‘new not currently classified as EMs that could
normal’ to emerge,” she says. become, or could become again, sources
Indeed, at this year’s World Economic Forum in of global growth. We don’t propose
Davos, income inequality was among the issues at replacing the term “emerging markets” with
the top of the list of countries’ current concerns, the term “3G”, but instead use 3G to tag
leapfrogging environmental issues, which dominated those entities we consider likely to thrive in
the global agenda for many years before the financial our globally integrated economy.
crisis struck.
Mr Buiter agrees, warning that the political backlash WILLEM BUITER IS CITI’S CHIEF
ECONOMIST. HE HAS BEEN A MEMBER
against income inequality, both in advanced and OF THE BANK OF ENGLAND’S
emerging economies, could strengthen. “Governments MONETARY POLICY COMMITTEE AND A
COLUMNIST FOR THE FINANCIAL TIMES
may use more taxation instruments and globally
there may be a further attack on tax havens. Recent
governmental and intergovernmental activity in these
areas is not a passing phase,” he says. “It’s going to be a
tougher playing field for the rich.”

14. MONITOR
GLOBAL WEALTH DISTRIBUTION AND LOCATIONS FAVOURED BY THE SUPER-RICH
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CITY
POWER
EMERGING ECONOMIES MIGHT
DOMINATE GLOBAL ECONOMIC
GROWTH FORECASTS, BUT TWO
STUDIES SUGGEST THE WORLD’S
ESTABLISHED TOP CITIES WILL
CONTINUE TO DRAW THE WEALTHY
FOR SOME TIME TO COME. VICKI
SHIEL LOOKS AT THE NUMBERS
LONDON REMAINS THE CITY OF CHOICE FOR THE WORLD’S SUPER-RICH
HOWARD KINGSNORTH/GETTY IMAGES

16. W
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GLOBAL WEALTH DISTRIBUTION AND LOCATIONS FAVOURED BY THE SUPER-RICH
16
ith the VICKI SHIEL leading cities in 10 years’ time, suggesting
seismic shifts taking place in economies, power structures and Residential Research, it will be some time yet before their
societies around the world, a very different economic landscape is Knight Frank influence fades.
developing in which the rise of the emerging economies looks set When asked what makes a global city, the
to be a permanent feature. But what does this mean for the world’s top-scoring indicators were personal safety
global cities? Traditionally the likes of London and New York have and security, economic openness and social
reigned supreme, but will they be able to maintain their dominance stability, which is perhaps unsurprising
in the face of growing competition? given recent geopolitical turmoil around
Research by Knight Frank suggests that, for now at least, their the globe, and goes some way to explaining
position looks safe. This year sees the first instalment of our new-look London’s impressive performance. Though
global cities study – a sentiment survey that draws on the insight deemed less important, the availability of
of Citi Private Bank’s wealth advisors around the world, as well as luxury housing and excellent educational
luxury property specialists from Knight Frank’s global network. opportunities, as well as the presence
The objective of the survey is to assess the importance of key cities of other HNWIs, were also noted as key
to HNWIs, based on everything from investment potential and attributes – all of which London and New
economic openness to their appeal as somewhere to live or visit. York have in abundance.
According to our findings, London continues to lead the pack, But for how long can London and
coming top in virtually every category of our survey. New York retain these top spots? Beijing,
But that could all change with emerging-economy Shanghai, Singapore and Hong Kong are hot
cities such as Beijing and Shanghai rising up the London continues on their heels in our table of the leading
ranks as places to watch over the next decade.
Here we consider the results of our survey as well
to lead the cities in 10 years – Beijing made it to third
place in this league (a rise of six places),
as the findings of research into the competitiveness pack. But that followed by Shanghai, Singapore and Hong
of 120 cities, conducted by the Economist Intelligence
Unit (EIU) and commissioned by Citi Private Bank.
could change Kong, knocking Paris down to seventh place.
Beijing and Shanghai also lead the list of
as emerging cities growing in importance most quickly
GLOBAL CITIES SURVEY economy cities to HNWIs, followed by London, Singapore,
We asked respondents to rank the most important Hong Kong and New York. This reflects the
global and regional cities to HNWIs now and in 10 rise up the ranks impact of the flourishing economies of the
years, and to pinpoint those growing most quickly East. But is economic growth alone enough
in importance. We also asked them to rank cities to make a city really matter to HNWIs?
in terms of economic activity, political power,
quality of life, and knowledge and influence (see EIU GLOBAL CITY INDEX
Databank, p63). Research commissioned by Citi Private Bank
London took the pole position in almost every from the EIU ranks the competitiveness
category. Survey respondents from all regions bar one voted it the of 120 of the world’s top cities. New York,
city that matters most to their clients now. Even respondents in Asia London and Singapore top the rankings,
Pacific put London and New York ahead of Hong Kong, Singapore, while the highest-scoring Chinese city is
Shanghai and Beijing. Only respondents in Latin America disagreed, Beijing (39).
putting London in third place after New York and Miami. London But going only by GDP growth – one of
and New York remain in first and second place in our league of the the 31 indicators in the ranking – nine of

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63
WHAT IT TAKES TO
BE A GLOBAL CITY
VERY IMPORTANT FACTORS
%
OF HNWIs SAYS PERSONAL
SECURITY
21%
OF HNWIs SAY
EDUCATION
For more
city rankings
the top 10 cities in the world are in China.
and investor The top 20 are all in China or India. And
intelligence turn except for Doha, Lagos, Panama City,
to Databank
on p58 and Lima, the top 30 are all in the Asia-
Pacific region.
Many of those fast-growing Chinese cities, ELSEWHERE IN THE WORLD
THE CITIES THAT MATTER
TO HNWIs –GLOBAL however, performed significantly less well ONES TO WATCH
CITIES SURVEY for freedom of expression and human rights Though the leaders in our global cities survey represent
– something that may hinder any future the usual big players, the wider results reveal the
MOST IMPORTANT NOW
ascent to the top of the overall ranking. emergence of other interesting trends
1 London Their performance in the “global appeal”
2 New York
3 Hong Kong
category – which considers factors such as SAO PAULO Currently ranked 18, but our respondents
4 Paris the number of companies located there expect Brazil’s largest city to climb 10 places in 10 years to
5 Singapore from the Fortune 500 index of the largest US become the eighth most important city in the world.
6 Miami
7 Geneva companies – is also relatively poor, with just MIAMI Ranked six in the overall table. South American
8 Shanghai Beijing (5) and Shanghai (23) making the top respondents voted it the second most important city in
9 Beijing 80 of the 120 cities studied. the world after New York, while North Americans put
10 Berlin
it at number five. The city is a growing hub for South
MOST IMPORTANT IN
10 YEARS
EASTERN PROMISE Americans doing business in North America.
The statistics on China’s growth are DUBAI Despite its struggles in recent years, it was voted
1 London remarkable. Its luxury goods market is the 13th most important city in the world.
2 New York
3 Beijing
growing 35% annually and luxury brands MUMBAI, NEW DELHI, RIO AND ISTANBUL
4 Shanghai such as Prada and Gucci are opening stores All cities that our respondents said are growing rapidly
5 Singapore in cities mostly unknown outside China. in importance.
6 Hong Kong
7 Paris But the relative anonymity of these
8 Sao Paulo secondary cities could well change in the
9 Geneva near future. Even the most conservative
10 Berlin
forecasts suggest that by 2025 China will
GROWING IN IMPORTANCE have around 130 cities with over one million
TO HNWIs THE FASTEST inhabitants, more than the US and Europe governments are developing, their citizens
1 Beijing combined. Of those, around 90 are expected are demanding more rights, and the cities
2 Shanghai to have over five million people, while eight are blossoming. If I were to choose one that
3 London will be home to more than 10 million. To will join the future list of global cities, I
4 Singapore
5 Hong Kong put this into perspective, New York is the might choose Dalian [in north-east China],
6 New York only US city that has a population of more although many would say China’s next great
7 Sao Paulo
8 Dubai
than five million (8.2 million in 2010). city is Chongqing [in the south-west]. There
9 Mumbai This raft of second and third-tier cities are around 30 million people living there
10 Paris is likely to become increasingly influential, and a staggering amount of money is being
says Jim Rogers, a US investor based in spent on its development.”
Singapore: “These secondary cities are SEE OVERLEAF FOR PREDICTIONS OF THE
becoming more powerful – their local WORLD’S LEADING CITIES IN 2050

18. MONITOR
GLOBAL WEALTH DISTRIBUTION AND LOCATIONS FAVOURED BY THE SUPER-RICH
20
18
China opens its economy, currency and LONDON OR NEW YORK: The most
markets, it will continue to grow. It also has significant driving force of any city is
a well-educated and strong labour force. its people. It is crucial to have a liveable
Democracy, human rights and freedom environment for increasingly mobile
of speech have been improving for some populations, and to attract a significant
time now and I believe will continue to foreign workforce. More than one-third of
do so. Thirty years ago there was just one people in New York and London are foreign-
newspaper, radio station and television born. Despite their astonishing growth,
channel. Now there are many media outlets, Asian economic powerhouses fail to reach
50
and demonstrations take place each year that level of cosmopolitan culture. New
where no one dared before. Shanghai does York or London will continue to top the
have its drawbacks: the traffic and pollution indices, but only if they ensure their strong
are terrible because the economy is growing cultural offers are unmatched and maintain
faster than the infrastructure. open immigration policies.
JIM ROGERS DAVID ADAM
Investor, Singapore Managing Director, Global Cities, London
SHANGHAI: The “head of the dragon” LONDON: The global cities of the future
has more freestanding buildings over will remain those that can provide security
400 metres than any city in the world, and diligence to international firms and
and a cityscape to rival the West’s most clients, while evening out inequalities at
impressive. With the Chinese economy on home. London will continue to be one such
course to overtake the US as the largest centre if it continues to follow structural
in the world, in some estimates as soon adjustments in its economy. These include
as 2020, Shanghai is poised to take this bringing large institutional investors
mantle. Doubts persist about whether into the rental market, which will turn
We asked leading the state capitalist “one-party” model can Londoners into renters rather than owners
commentators to continue to balance growth while pacifying
the growing and vocal middle class. But
and divert the surplus from real estate into
more productive capital.
predict the world’s top these concerns are likely to be overcome DR SAVVAS VERDIS
city in 2050. Shanghai, due to the sheer size of the market, a
maturing of the economy and inevitable,
Chief Executive, Rankdesk, London
SEE OUR INTERVIEW WITH CARTIER CEO
China’s financial centre, incremental, political reform. BERNARD FORNAS FOR MORE INSIGHT, P22
NICHOLAS HOLT
emerged as the most Asia-Pacific Research Manager,
popular choice Knight Frank, Singapore CITIES OF THE FUTURE
RENATO GRANDMONT
SHANGHAI: It has the world’s
largest container port, fastest A shift is taking place from developed to developing
train, longest metro system and economies – not a simple West to East shift, but a multi-
is currently working on the directional one to places such as Sao Paulo, Mexico City
world’s second tallest building. and Istanbul. The East is increasingly important, with
But what is vitally important in China’s plethora of 1 million-plus cities, led by Shanghai
a global city is a strong brand. and Guangzhou. But demographics alone are not the
Frankfurt and Hong Kong lose deciding factor. I think the cities of the future will include
SHANGHAI: The city is a catalyst for out to New York and London Cairo, Lagos, Johannesburg and Mumbai, as well as
cultural and technological innovation and as global cities because nobody established global centres such as New York, London
represents Chinese modernity – in 1980 dreams of “making it big” in and Moscow. We will also likely see a number of new
there were no skyscrapers, today it has twice Frankfurt. A true global city players emerge. As a final thought, let us not forget that
as many as New York. By 2050 its population is one with a brand people some refer to the the social media site Facebook as the
is projected to reach 50 million. Market recognise, an image to which world’s largest country. Technological developments mean
liberalisation will help Shanghai become they aspire and a place where people can live where they want, which may affect the
a global financial centre and it is forging they dream of living. Shanghai pre-eminence of cities in time (see p20 for more thinking
ahead as a cultural hub and global performs well on all these and on future cities).
tourist destination. is where the next generation
TIM HANCOCK AND ROHIT TALWAR of ambitious entrepreneurs RENATO GRANDMONT IS CHIEF INVESTMENT
OFFICER FOR CITI WEALTH MANAGEMENT AND CITI
Foresight Director and Chief Executive, Fast and visionaries will dream of PRIVATE BANK IN LATIN AMERICA
Future Research, London making their mark.
BRYN ANDERSON
SHANGHAI: The most important city in Valuation Director,
China in the past and it will be again. As Brand Finance, London

19. THE WEALTH REPORT 2012
WWW.THEWEALTHREPORT.NET
19
Shanghai:
poised to
become the
world’s leading
city in 2050
New York: a
rich cultural mix
keeps it in the
top league of
world cities
JEAN-LUC BERTINI/PICTURETANK, MARK HENLEY/PANOS

20. MONITOR
GLOBAL WEALTH DISTRIBUTION AND LOCATIONS FAVOURED BY THE SUPER-RICH
20
NEW WORLD avoid locating in London or New York, where
costs are high, and if Copenhagen serves
ORDER their purposes just as well, there is little
doubt as to where they will go. The mass-
consumption sector is the opposite: the
New York
2
3
While the balance of urban more cans of coke or mobile phones you can Chicago 1
Washington
power today is held by a sell, the better.
These are the geopolitical urban vectors
small number of megacities, underlying the global economy that I believe
some believe that could all will shape the future:
1 WASHINGTON/ 2 NEW YORK/
change. Here we share some 3 CHICAGO: These cities are becoming
13 Brasilia
of the latest thinking on more important geopolitically than the
United States is as a country. Chicago is 12 Rio de Janeiro
the rise of urban networks rising fast as a geopolitical actor – think of
11 Sao Paulo
and the emergence of a new the state visit by Chinese president Hu Jintao
in January 2011, when he stopped not just in
breed of city that punches Washington but also in Chicago.
4 BEIJING/ 5 HONG KONG/
above its weight 6 SHANGHAI: Beijing is the centre of
power, but Hong Kong’s global intermediary
role is critical. Shanghai is the leading
7 Berlin
national industrial and financial centre.
7 BERLIN/ 8 FRANKFURT: With Berlin the
8 Frankfurt
DOMINANT CITIES seat of the European Union’s most powerful
REPLACED BY MULTIPLE economy and Frankfurt the seat of the EU
CITY NETWORKS Central Bank, this axis is the bulwark for the
Saskia Sassen EU. If there were no EU, they would not be as
significant geopolitically.
Predicting which cities will lead the world in 9 ISTANBUL/ 10 ANKARA: Istanbul, long
2050 is not a straightforward economic story; the East/West and North/South hinge city, 14 Brussels
it is about geopolitics, as the global city is an in combination with Ankara, is rapidly
international actor of sorts. becoming a major global policy nexus.
The emerging urban geopolitics is 11 SAO PAULO/ 12 RIO DE JANEIRO/
centred in networks of cities – mostly, but 13 BRASILIA: The new politico-economic
not exclusively, global cities. This began in heavyweight axis next to now-established
the late 1980s and now serves as important China. The Brazilian Development Bank
infrastructure for the global economy. is richer than the World Bank, and its
It has become clear over the last few decades economic power is large and ascendant.
that our geopolitical future is not going to be 14 BRUSSELS: The EU may be struggling
determined by the ‘G2’ combination of the with economic crises in several member Istanbul
United States and China. It will instead run states, but its institutions and capabilities 9
10 Ankara
via 20 or so strategic urban networks. These are unlike those of any other union of states.
networks have grown in importance on the 15 CAIRO/ 16 BEIRUT: They rearticulate what
back of the globalisation and urbanisation of the Middle East means as a region. Beirut
an increasing number of economic activities. has long had politico-economic networks
Those cities that work together begin to matter worldwide; Cairo has a history of empire. 16 Beirut
more in the global economy and in geopolitics 17 GENEVA/ 18 VIENNA/ 19 NAIROBI: These
than their respective countries. cities have the critical mass and mix of
Firms that sell to other firms rather institutions devoted to social questions
15 Cairo
than consumers thrive on the specialised and justice for the powerless, with Nairobi
differences of global cities. Consider London, increasingly important in a rapidly
New York and Paris – they are all major urbanising world. They have long been
financial centres, but they are specialised overshadowed by global finance and mega-
in very different sectors of finance. What militaries. But they will emerge as critical 4 Beijing
matters to these firms is not the city as a actors in the global commons.
supermarket, but as a specialised shop. By
this rationale, different firms will prefer PROFESSOR SASKIA SASSEN IS CO-CHAIR OF THE 6
different city networks. The various city COMMITTEE OF GLOBAL THOUGHT AT COLUMBIA
Shanghai
UNIVERSITY, AND COINED THE TERM “GLOBAL
rankings and indices do measure something CITY”. IN 2011 FOREIGN POLICY MAGAZINE
that matters. But for many firms, if they can NAMED HER AMONG ITS TOP 100 THINKERS 5 Hong Kong

21. THE WEALTH REPORT 2012
WWW.THEWEALTHREPORT.NET
21
1
3 1
2
FAST-GROWING EMERGING
MARKET MIDDLEWEIGHTS
Jaana Remes
The unprecedented pace and scale of
urbanisation in developing countries is among
the few bright spots on a global economic
7 horizon clouded by ageing populations,
increasingly volatile resource prices and debt
13 crises. It is no longer just a story about the rise of
12 megacities such as Shanghai or Mexico City.
11
We believe the cities to watch in 2050 are the
400 emerging market “middleweights” – fast- HNWI POINT OF VIEW
6
WHAT MAKES A GLOBAL CITY?
growing cities with populations between 200,000
and 10 million. This dynamic group includes
many cities that are not household names today: A vibrant international business sector
1 LINYI, 2 KELAMAYI and 3 GUIYANG in AMERICAN
China; 4 SURAT and 5 NAGPUR in India;
and 6 CONCEPCION and 7 BELEM in Latin Safe and cosmopolitan
America. Yet collectively they are global growth LATIN AMERICAN
engines, reducing poverty, expanding the global
middle class by millions of households, and It must follow the London model:
entrepreneurial, cosmopolitan, free
creating new market opportunities for local and enterprise, capitalist, favourable tax
multinational companies. structure, great entertainment, cultural,
enriched society with great diversity
3 JAANA REMES IS SENIOR FELLOW AT THE MCKINSEY MIDDLE EASTERN
14 8 7 GLOBAL INSTITUTE, SAN FRANCISCO
17 18 WWW.MCKINSEY.COM/INSIGHTS/MGI
Be an international financial centre and
an investment conduit for foreigners
9 10
and residents alike
16 GLOBAL INTELLIGENT HONG KONG
15
4
5
COMMUNITIES
Louis A. Zacharilla Sustainable property values in all real
estate sectors, including residential,
office, retail and industrial. Property
Most people will not have heard of these three values are a barometer of the health
cities. But 1 WATERLOO in Canada, 2 SUWON of the overall economy and also the
19 attractiveness of a city
in South Korea, and 3 EINDHOVEN in The SINGAPOREAN
Netherlands are working together as part of an
important fraternity and movement. These three, Good public transport, be safe and
along with about 100 others, have transformed have strong governance
themselves into what we call “intelligent INDIAN
communities” – cities and communities that
have worked diligently to produce a very good Boast a wide range of recreational
facilities and good infrastructure
quality of life for citizens. Each has entered AFRICAN
an international awards programme and
been reviewed by academics and experts in
For more
order to be given this title. They are modelled survey results
on a holistic set of criteria including good and investor
intelligence turn
telecommunications access, a knowledgeable to Databank
workforce, innovation in their local governments on p58
and culture, and activities aimed at closing
digital and social divides. Broadband and the
2
4 emergence of a global digital infrastructure have
2
1 made these improvements possible. By 2050, no
6 matter where a person lives, they will be able to
3
5 participate in the global economy.
LOUIS A. ZACHARILLA IS CO-FOUNDER OF THE
INTELLIGENT COMMUNITY FORUM, NEW YORK
WWW.INTELLIGENTCOMMUNITY.ORG

22. MONITOR
GLOBAL WEALTH DISTRIBUTION AND LOCATIONS FAVOURED BY THE SUPER-RICH
22
do you have to alter your brand building
and marketing messages when targeting
consumers around the world?
BF A beautiful creation is recognised as such
by any client around the world. Our strength
stems from the consistency and continuity
of style – a rich aesthetic expression fed
from over 165 years of creation. It would be
unthinkable and detrimental to our maison
to try and alter our creation process seeking
to cater to specific clients. The same goes for
our brand building. We strive to spread the
THE ORIENT EXPRESS
same values worldwide.
AS What is it about the Cartier brand
that makes it so desirable to the Chinese –
BERNARD FORNAS how important is heritage in a market
CEO AND PRESIDENT, CARTIER that has only recently been exposed to
luxury brands?
NOTHING BETTER REFLECTS ASIA PACIFIC’S BF Chinese customers learn fast and are
very much aware of what makes a brand
ECONOMIC FIREPOWER THAN ITS SURGING SHARE desirable: over 165 years of history, an
OF THE LUXURY GOODS MARKET. ANDREW SHIRLEY outstanding know-how and an unparalleled
TALKS TO THE MAN WHO HAS LED ONE OF THE
creativity, all features that define a maison
such as Cartier.
REGION’S TOP BRANDS FOR THE PAST 10 YEARS
AS As emerging economies become
more accustomed to their new wealth
are you concerned that the attraction of
international brands will wear off or
that local luxury brands will become
The numbers tell the story. Five in the region has grown for luxury goods? more competitive?
years ago the Asia-Pacific region BF If the speed with which this development BF I strongly believe that maisons like Cartier,
accounted for just over 20% of took place could have been a source of known for their exclusivity, excellence,
sales at Richemont, the Swiss luxury brands surprise, its scale was to be expected given creativity and know-how, will always
business where jeweller and watchmaker the great economic power of the region. maintain their desirability.
Cartier is the star performer. By 2011 its
share was almost 40%. Over the same period AS Do you find that the demand mix for AS Where do you expect future growth to be
sales in the region grew by 140%, compared your jewellery and watches varies around strongest and do you plan to open any new
with 27% in Europe. Even in Europe analysts the world – for example, is the growth boutiques in countries where you do not
estimate that tourists from emerging in Asia being driven by sales of your currently operate?
economies account for up to half of the sales “initiation” pieces rather than your most BF We invested strongly in China, and
in Cartier boutiques. expensive ranges? there is still a lot of potential. Contrary to
BF On the contrary, we find a very similar many other brands, Cartier can rely on an
ANDREW SHIRLEY When did it become structuring of our activity in all regions. excellent repartition of its stores across the
clear to you that Asia, particularly China,
was set to become your biggest market? AS Is it true that when times are hard, the
BERNARD FORNAS Cartier recognised very wealthy prefer to buy things that appear The shift of economic
early the potential of the Asian market. We
opened our first boutique in Hong Kong in
less ostentatious?
BF When times are hard, customers tend to
power to Asia is
1970, followed three years later by one in turn to legitimate brands with authenticity undoubtedly one of
Singapore and the next year by another in
Tokyo. Cartier has been present in China
and there is less showing off. For instance
in the watch sector, bigger pieces are losing
the big geopolitical
since 2001. Today, with 43 stores in 22 cities, ground to more discreet timepieces. questions of this decade
we benefit from our pioneering spirit and
having taken a calculated risk at the time. AS Although you have always been clear
that Cartier does not, and will not, create
AS Were you surprised at how fast demand specific products for different regions,