http://www.straitstimes.com/Money/St...ry_584312.html

Sep 29, 2010

Rich Asians 'may cut property holdings'

Fixed income products, equities could gain as portfolios are tweaked: Report

By Harsha Jethnani


THE region's well-heeled have always put big chunks of cash into bricks and mortar, but concerns over property bubbles and government cooling measures will lead them to diversify, says a new report.

Asia-Pacific's high net worth individuals are expected to reduce the portion of their wealth in property from 26 per cent last year to 18 per cent by next year, said Merrill Lynch Wealth Management and Capgemini yesterday.

The fall is anticipated to be more drastic for Singaporeans, who held most of their wealth - 34 per cent - in real estate last year, their Asia-Pacific Wealth Report said.

This is expected to fall to 24 per cent by next year due to market corrections and tightening measures.

Equities and fixed income products are expected to gain the lion's share of interest as wealthy Asians rebalance their portfolios in the light of rebounding share markets.

But property is not down for the count just yet.

'The significant interest in real estate markets is expected to remain,' said Ms Foong Lai Kiun, Capgemini Singapore's director of financial services solutions for Asia-Pacific, at a briefing yesterday.

'Real estate is viewed to be relatively safer and delivering better returns and in the Asia-Pacific, the investment options are limited.'

The sustained interest will prompt banks to diversify products and simplify the ways people can invest in real estate.

This will involve expanding the number of indirect investment options, including real estate private equity or real estate investment trusts.

Ms Foong said wealth advisers will have to brush up on real estate governance and regulations so they can offer specialised advice.

Wealth management firms may also consider third-party tie-ups with luxury real estate agents and developers, picking off their knowledge and familiarity to offer clients customised real-estate solutions.

The report, which reiterated figures from a global version released in June, found that the number of high net worth individuals - those with investable assets of at least US$1 million (S$1.32 million) - in the Asia-Pacific grew to three million last year, 25.8 per cent more than in the previous year.

Their total wealth increased by 30.9 per cent to US$9.7 trillion over the same period.

The number of ultra high net worth individuals - with investable assets of at least US$30 million - grew 36.7 per cent to 19,600, while their wealth jumped by 42.6 per cent from 2008 to last year.

Japan, China and Australia are home to 76 per cent of the region's rich and 64.6 per cent of regional wealth.

Japan has more well-heeled people than anywhere in the region, with 1.65 million, followed by China with 477,000.

'China and India will lead the way in the region with economic expansion and growth (of numbers of the wealthy) likely to keep outpacing more developed economies',' the Asia-Pacific Wealth Report said.

Singapore has 81,600 high net worth individuals, 32.7 per cent more than in 2008, and the highest increase after Hong Kong, India and Taiwan.

A diversification from property means their proportion of wealth in shares is tipped to rise from 25 per cent last year to 38 per cent by next year.

Merrill Lynch anticipates Singapore's gross domestic product to grow by 15.1 per cent this year, but fall to 5.8 per cent next year.

[email protected]