More rich trade Gangnam for Gyeonggi

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More rich trade Gangnam for Gyeonggi


Korea’s rich used to be heavily concentrated in Seoul, but they’re now flocking to Gyeonggi in droves.

They’re also shifting toward safer places to keep their money, such as bank deposits, as the local stock market has remained lukewarm, according to findings announced by KB Financial Group in this year’s Korea Wealth Report, which was released on Monday.

According to the study, the number of Koreans with a net worth of more than 1 billion won ($888,000) in financial assets increased by 15.2 percent last year over 2016 to 278,000. The richest Koreans’ combined wealth amounted to 646 trillion won, up 17 percent jump from a year ago.

Since the banking group started releasing the wealth report in 2011, the number of wealthy Koreans has grown at an average of 11 percent annually, while their combined wealth expanded at an average of 10 percent a year.

The study found that while the majority of rich Koreans still live in Seoul, their share dropped. The percentage of the rich that lived in Seoul dropped from 47.3 percent in 2013 to 43.7 percent, or 122,000 people, last year. Gyeonggi was in second place, and its share increased from 19.3 percent in 2013 to 21.3 percent, or 59,000 people, in 2013. Busan had the third-most wealthy individuals, at 19,000, but the city’s proportion decreased from 7.6 to 6.6 percent.

The share of the wealthiest Koreans living in the three swanky Gangnam districts in southern Seoul also fell from 37.5 percent in 2013 to 35.6 percent last year.

Wealthy Koreans still had more of their money in real estate than financial investments. Over 53 percent of their investments were in real estate, while 42.3 percent were in financial investments and 4.4 percent was elsewhere.

Their real estate holdings increased from 2017’s 52.2 percent, while the share in financial investments dropped from 44.2 percent a year ago.

The increase in real estate was largely due to the continuous rise in the value of real estate last year. More than 85.5 percent of Korea’s rich owned real estate for investments, including commercial properties and rental apartments. Real estate was still seen as the strongest investment, with 29 percent of the wealthy seeing it as a lucrative investment. However, due to tighter government regulations, this figure dropped from 32 percent last year. In fact, 73 percent, up from 69 percent last year, said that making a lot of money in real estate would be difficult.

These sentiments also carried over to financial investments. This year, 51 percent of the wealthy’s financial assets were held in cash holdings or deposits, an increase from last year’s 48.9 percent. Stock holdings shrunk from 20.4 percent in 2017 to 11.8 percent this year.

“Compared to last year, expectations for the local stock market fell, which led to stock portfolio shrinking. Due to efforts to secure liquidity and safer profits, cash and deposit holdings have gone up,” the study stated.

According to the study, 60.5 percent of the wealthy were concerned over the possibility of the current market sluggishness continuing, up 16.8 percentage points from 43.7 percent a year ago.

Nearly 64 percent said they will reduce their spending after closely monitoring the situation, or 20 percentage points more than a year ago. Sixty-nine percent said that securing liquidity is more important than making new investments.

The study has also found that wealthy Koreans were active investors in cryptocurrency.

Since the Korean government tightened its regulations on cryptocurrency to cool the overheated market, only 4 percent of the rich own cryptocurrency, which is lower than the 6.4 percent of ordinary investors who do.

However, when it comes to whether they have experience investing in cryptocurrency, that figure shoots up to 20.3 percent, more than the 7.5 percent of average investors with crypto experience.

When asked whether they have future plans to invest in cryptocurrency, 74.8 percent said they will not, while 25.3 percent said they will consider the possibility depending on the situation.

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