Wealthy Australians are expected to return to investing in equity and debt markets as trading conditions improve, a survey shows.

Local high net worth individuals (HNWI), people with net assets of at least $1 million, are becoming more confident in riskier investments, the Merrill Lynch-Capgemini Asia-Pacific Wealth report says.

Australian HNWIs are projected to increase their equity investments by four per cent, and fixed income investments by three per cent in 2010.

Real estate investments are expected to fall by 10 per cent, however.

“Amid the market uncertainty of last year, there was a flight to safety by HNWIs to the more tangible asset classes of property and cash,” Merrill Lynch head of Global Wealth Management for Australia Chris Selby said, releasing the survey results on Tuesday.

“As the economy recovers, and market confidence strengthens, asset allocations to equity and debt market investments will increase.”

The majority of investments are expected to be made domestically with investors confident in the local market.

“Australia has a very deep and stgeloped capital market. There’s a lot of transparency, regulation… so it’s natural to keep your capital here and look for opportunities,” Mr Selby said.

By the end of 2008, Australia’s population of millionaires fell by 23.4 per cent, from 168,700 to 129,200.

Australia ranks third in the region behind Japan and China. Of the 77 countries in the world survey, Australia slipped from 10th place to 11th.

The survey says that economic upturn would redress the wealth declines of millionaires and increase the number of wealthy as the Asia-Pacific region is to overtake North America as the largest region by wealth by 2013.

Meanwhile, investments of passion by millionaires in 2008 showed an increase in sports investments, such as race horses and sporting teams, as well as travel and musical instruments.

“When you’re talking with your friends, it’s not as interesting to talk about the latest stock tip in a deteriorating market,” Mr Selby said.

“You’re more comfortable to discuss your latest travel or the musical instruments you’re buying.”

Asia-Pacific HNWIs are expected to increase their philanthropic giving in 2009, more than their global peers.

Many of those surveyed saw philanthropy as a social responsibility, however. This area is expected to rebound with the market.