The wealthiest members of society owned an average of 18.7 billion won (S$19 million) in cash holdings and deposits. - Reuters
SEOUL (The Korea Herald/Asia News Network): The wealthiest in South Korea tended to increase their shares of safe haven assets, such as cash holdings and deposits, rather than taking a risk with real estate in 2022, according to a report published on Sunday by a think-tank under Hana Bank.
According to the 2023 Korean Wealth Report compiled by the Hana Institute of Finance, the wealthiest members of society owned an average of 18.7 billion won (RM63mil) in cash holdings and deposits, accounting for an average of 58 per cent of total assets, more than double the 25 per cent from 2021.
“The rate of cash holdings went up in preparation for economic uncertainties,” the report said, adding: “The preference for deposits went up amid base rate hikes in 2022.”
The report was based on a survey of 2,013 South Koreans above the age of 19 conducted in December 2022.
Of the respondents, 745 were defined as “wealthy”, meaning that they have financial assets over 1 billion won per household.
Among the 745 respondents, those with financial assets over 10 billion won or personal assets over 30 billion won per household were categorised as “super-rich”.
In 2022, those classed as super-rich owned an average of 32.3 billion won in total assets.
They owned an average of 15.6 billion won worth of real estate assets, marking a 5 billion won drop from 2021. Instead, the average financial assets owned by super-rich individuals went up from 15 billion won to 16.1 billion won over the same period.
On the other hand, with the slowdown of the stock market, the super-rich owned fewer stocks than before, with 520 million won worth of stocks in 2022, marking a sharp drop from 1.68 billion won in 2021.
The super-rich earned an average of 1.2 billion won a year. Of the earnings, 39 per cent came from property income, followed by business income and then labour income.
They spent an average of 400 million won per year, excluding savings and loan payments. They spent the most on travel (24 per cent), followed by education and then attire.
The report also looked into the lives of wealthy South Koreans with financial assets over 1 billion won. The wealthy respondents had an average of 7.2 billion won in total assets in 2022.
Despite the slowdown in the housing market, real estate is still an attractive investment outlet for wealthy South Koreans, the report showed.
While 84 per cent of the wealthy respondents predicted that the real estate market will worsen this year, 32 per cent still chose real estate as the best investment option.
Additionally, 37 per cent said that the real estate market will rebound in 2025. Another 26 per cent and 24 per cent projected the rebound to happen in the second-half of 2024 and the first-half of 2024 respectively.
Among the wealthy, 36 per cent said stability was the advantage of real estate investments. For the other 32 per cent, high profitability was the appeal.
“In every crisis from the financial crisis (in 1997) to the Covid-19 pandemic, there were opportunities for gaining wealth. Those who seized the chance became the ‘nouveau riche’ or super-rich,” Hwang Sun-kyung, senior researcher at the Hana Institute of Finance said.
