“That number surprised me because 41 percent is very high compared to the average of 24 percent across Asia,” said Ong Yeng Fang, managing director of market management for Merrill Lynch’s South Asia unit.

“Maybe it’s because Singaporeans are getting affluent, and they are able to appreciate more the aesthetic and cultural value of these pieces. At the same time, I think it’s also a hedge against inflation and currency risk.”

Kenny Chan, group managing director of high-end watch retailer The Hour Glass, told The Straits Times he had seen more people investing in luxury watches. “The Hour Glass has dedicated two concept stores to cater for the watch connoisseurs and collectors.” They had been specially built to promote the “watch culture” in Singapore.

It opened the first at Ion Orchard in 2009 and the second, 750-square-meter duplex store, at Knightsbridge this year.

Singapore millionaires’ heavy investment in items like high-end watches came at the expense of boats, cars and aircraft. Millionaires here devoted a paltry 6 percent of their total luxury investments to such vehicles last year.

It was the lowest proportion of investment in this category in Asia. The wealthy in Malaysia, for instance, spent 46 percent of their luxury investments on these various types of posh conveyances.

“Cars are extremely expensive in Singapore, so people who buy luxury cars here are in a completely different bracket compared to people who buy luxury cars in other countries like America and Europe,” said a spokesman for Ferrari agent Ital Auto.

The number of millionaires in Singapore has climbed to its highest level yet at 99,000 last year, according to the report ― having surged 21.3 percent from 82,000 in 2009.

Together, Singapore millionaires held about $453 billion worth of financial assets last year, an average of about $4.6 million per millionaire here.

About a third of their assets went to property, a third to equities, and another third to cash, fixed income and other financial instruments.

The report defined high net worth individuals as those having investable assets of $1 million or more, excluding primary residence, collectibles, consumables and consumer durables. The results also suggest Singapore may have the largest number of such individuals per capita in Asia as of last year.

The rise in the number of these millionaires here last year coincided with a strong year of growth as the economy roared to life after the recession. GDP growth last year was a record 14.5 percent.

The report noted however that economic expansion was likely to “abate slightly in 2011 and 2012 as economies absorb the withdrawal of fiscal and monetary stimulus, rising inflation, constrained capacity, and the macroeconomic imbalances prompted by large foreign-capital inflows”.

By Melissa Tan

(The Straits Times)