Japan’s Affluent and HNWI Markets Consisted of 903,000 Households and Amounted to ¥254 Trillion in 2007, While Its Inheritance Market Will Expand to ¥102 Trillion by 2015
October 1, 2008
Nomura Research Institute, Ltd.
Nomura Research Institute, Ltd. (NRI: Tokyo, Japan; Akihisa Fujinuma, Chairman and President, CEO & COO) has estimated the size of Japan’s personal asset management market as classified by the amount of net financial assets owned in 2007, and projected the size of the inheritance market up through 2025.
Financial assets have increased due to increases in stock prices and real estate prices
In estimating the size of the market, NRI classified it by the amount of net financial assets owned, such as savings and deposits, equities, bonds, investment trusts, single-premium insurance/annuities, etc. (debts are deducted), into five segments of HNWIs (high net worth individuals), affluent, mass affluent, upper mass retail and mass retail. This estimate revealed that the size (the number of applicable households and the amount of financial assets owned) of the affluent and HNWI markets consisting of households holding net financial assets worth \100 million or more was 903,000 households and \254 trillion as of 2007 (Figure 1).
The size of the affluent and HNWI markets as of 2005, which was announced in 2006, was 865,000 households and \213 trillion, meaning that the market size has been expanding over the past two years. This increase in the number of applicable households and in net financial assets is considered chiefly attributable to the fact that stock prices continued to increase from 2003 to midyear 2007.
Since 2005, because real estate prices have increased principally in the three major urban areas of Tokyo, Osaka and Nagoya, there have been moves among people in the affluent and HNWI segments who own real estate in these areas to sell these holdings to obtain financial assets. Accordingly, the increase in land prices has also caused the number of applicable households and the amount of financial assets owned to increase.
The inheritance market continues to expand due to an increasingly graying population
NRI also projected the inheritance market up through 2025 (Figure 2). The number of heirs is expected to increase from 840,000 in 2007 to one million in 2015, and the total amount inherited such as real estate and financial assets will increase from \85 trillion in 2007 to \102 trillion in 2015.
Because most personal financial assets and real estate are owned by seniors, the inheritance market will continue to expand with the aging of the population pyramid in the future.
The key to future business is to develop products/services that meet the changing needs of the affluent and HNWI markets
With the increase in the number of people in the affluent and HNWI segments and the transfer of assets to the next generation through inheritance, a major change is expected to occur in the thinking of Japanese people about the management of financial assets and real estate. For example, financial assets held by the newly emerged affluent and HNWI segments and those inherited by the next generation are likely to lead to a shift from “savings to investments” to effectively utilize personal financial assets in Japan. Financial institutions are required to develop products/services that meet these market changes.
In the future, NRI will continue to analyze trends in the affluent and HNWI markets, and propose appropriate businesses targeting affluent customers of financial institutions.
Figure 2: Projected Size of Inheritance Market (2008~2025)
Copyright(c) 2008 Nomura Research Institute, Ltd. All rights reserved.
No reproduction or republication without written permission.