http://www.businesstimes.com.sg/archive/thursday/premium/top-stories/asias-ultra-wealthy-invest-more-property-survey-20140306
Published March 06, 2014
Asia's ultra-wealthy to invest more in property: survey
S'pore remains a favoured location for a second home
By Genevieve Cua
[email protected]
[SINGAPORE] Real estate remains a favoured asset class among ultra-high net worth individuals, and Singapore remains in their sights as a favoured location for a second home.
Knight Frank's The Wealth Report 2014 has found that 45 per cent of Asia's ultra-wealthy plan to invest more in property this year, compared to a global average of 47 per cent.
The wealthy in the Russia/Commonwealth of Independent States (CIS) market are even more bullish at 71 per cent, followed by the Middle East market at 59 per cent.
Singapore's ultra- wealthy continue to favour the island republic as their most popular investment destination, despite the measures to cool the property market.
Alice Tan, Knight Frank's head of consultancy and research, said: "Despite the many rounds of cooling measures put in place by the government, interest in prime residential and commercial properties is still evident, as shown in the wealth attitude survey. The conducive business environment and tax regime, political stability and Singapore's growing status as a key regional financial hub are strong attributes embraced by the ultra-wealthy in Singapore and in Asia."
Overall, however, the UK is the top location for a second home, followed by Singapore, the US and Australia.
Individuals considered to be of ultra-high net worth are those with net assets of at least US$30 million excluding their home.
The survey, launched jointly with the Bank of Singapore, involved 600 private bankers and wealth advisers.
The results represent the views of more than 23,000 ultra-high net worth individuals worth US$68 million on average. In aggregate, the clients held some US$1.5 trillion in assets.
Knight Frank Asia-Pacific head of research Nicholas Holt said that there are some risks to residential property. One is the potential for higher interest rates. "If inflation starts to pick up . . . if (the US) unemployment drops further, we could see sooner-than-expected rise in interest rates."
For now, while the Federal Reserve has embarked on a tapering of quantitative easing measures, interest rates are not expected to rise until around 2015.
A second risk is political, and this includes further measures to dampen house prices. Dubai, for instance, has imposed mortgage restrictions.
In the report's global cities survey, which tracks the cities of most importance to the world's wealthiest, London retains the top spot this year, followed by New York and then Singapore. In 2024, however, New York is expected to take top spot, followed by London.
Singapore is expected to drop to fourth place, and Hong Kong, to rise to third. Shanghai is also expected to rise by a notch to fifth. By 2024, six out of the 10 top cities will be in the Asia-Pacific region, compared to five now.
Booming Asian markets dominate this year's Prime International Residential Index. Jakarta heads the index with annual growth of 38 per cent, similar to the rate it recorded in 2012. Bali took third place with a gain of 22 per cent.
Chinese markets also staged a recovery last year. Beijing prices rose 17 per cent, up from 2.3 per cent in 2012; Guangzhou rose 14 per cent.
Mr Holt said: "China, as always, has been difficult to predict, with the market continuing to defy expectations and several rounds of cooling measures. The reality is that in such an equity-driven market, the Tier 1 cities are likely to see both demand and pricing continue to head higher."