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Study: World's uber-wealthy still crave luxury

Jewelry top choice among high-net-worth consumers

June 26, 2008

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New York—Despite increasing costs and financial market turmoil, the world's high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (Ultra-HNWIs) continued to seek luxury items last year, according to the 12th annual World Wealth Report from Merrill Lynch and Capgemini.

The report shows that HNWIs and Ultra-HNWIs spent considerable amounts of their wealth on both tangible investments of passion, such as fine art, luxury automobiles, private yachts, sports teams and jewelry, and intangible investments of passion, such as "live the dream" experiential vacations.

Private jets, custom yachts, high-end automobiles and other luxury collectibles accounted for 16.2 percent of passion investments among HNWIs as a whole last year, followed closely by fine art at 15.9 percent. Jewelry held third place at 13.8 percent and luxury/experiential travel ranked fourth at 13.5 percent.

And while jewelry, gems and watches ranked third as the most popular passion investment among the global high-net-worth population in 2007, HNWIs and Ultra-HNWIs in the Middle East and Asia favored this as their No. 1 investments of passion category, the study shows.

The report also found that during the past year, wealthy individuals from emerging markets such as China demonstrated significant influence in the global luxury marketplace.

"Even as financial market turmoil impacted the United States during the second half of the year, luxury goods makers, high-end service providers and auction houses all found ready clients in the emerging markets of the world—most notably, China, India, Russia and the Middle East—thereby sustaining their own growth," Capgemini Managing Director Bertrand Lavayssiere said in a media release issued on Thursday.

According to Merrill Lynch, industry analysts state that the global luxury industry tends to be a latecomer to economic downturns, which may explain why it did not experience the impact of the financial market turmoil of 2007.

History, however, has shown that investments in fine art, private planes, luxury cars and other high-end collectibles tend to fare well during economic downturns. In fact, analysts suggest that new wealth and growing consumer demand in Asia, Eastern Europe and the Middle East will continue to outweigh the pressures of the economic slump in Western markets.

To download the 2008 World Wealth Report, visit Capgemini.com.
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