Financial institutions, fund managers and just about anyone who wants to follow the money have another reason to set up shop in Singapore.

The number of wealthy individuals living in the smallest country in Southeast Asia is expected to rapidly increase over the coming years, and so will their assets, according to a report by London-based market research firm Datamonitor.

These wealthy individuals in Singapore will rise in number to 600,000 by 2011 from the current 410,000. The combined assets they hold will grow to $210 billion in four yearÆs time from the current $140 billion û an average annual increase of more than 7%.

Datamonitor considers as wealthy those who hold S$90,000 ($60,000) in onshore liquid assets including cash and deposits, equities, bonds and unit trusts.

ôSingapore is already occupied by a majority of the worldÆs leading financial institutions and competition amongst wealth managers will intensify as the local wealth market expands,ö says David Lalich, a Sydney-based financial services analyst at Datamonitor, and author of the report.

DatamonitorÆs assumptions for the Singapore wealth report include an expectation that the population will rise to 4.7 million by 2011 from 4.5 million in 2006.

It also assumes that onshore liquid savings and investments of individuals will rise 5% to 10% annually. ôThe biggest increase is expected to come from deposits and collective fund investments as retail investors shift their focus to more defensive investments and look for diversification outside of investing directly in equities,ö says Lalich.

Singapore operates as an open, export-oriented economy, which leaves it heavily dependent on foreign trade and investment from other international economies. The economy suffered from a series of adverse events between 2001 to 2003, including the global economic downturn and the Sars virus outbreak. International trade and tourism normalized in 2004 and have helped Singapore regain its economic footing.

ôThe recent economic performance of Singapore reflects that the country has fully recovered from its problems and is now set for further growth,ö says Lalich.

SingaporeÆs domestic economy expanded at its fastest quarterly pace in two years in the April to June period. Gross domestic product (GDP) grew 14.4% in the second quarter compared with the first three months of this year, its sharpest growth since May 2005. SingaporeÆs GDP is projected to grow by 7-8% this year, up from a previous forecast 5-7%.