Published July 10, 2007

Property players target high net-worth market

2 firms' new units serve private bankers, super rich


IN a sign of the times, private bankers, their high-net-worth (HNW) clients, and private equity funds are becoming increasingly important to property brokers with at least two houses setting up special HNW divisions recently.

One, Savills Singapore, says that it has already chalked up deals worth $120 million since its HNW division was set up in April.

Private bankers, who seek out new investment vehicles for their clients, have created the need for more synergy between financial institutions and property consultants.

Savills Singapore director of marketing and business development Ku Swee Yong said: 'HNW individuals are looking for seamless service, analysis, customised advice on portfolio strategy, asset allocation.'

He added: 'Three or four years ago, they might have got their exposure to the real estate market through real estate investment trusts (Reits) and property and construction-related stocks. More and more, the HNW individuals are keen on having a higher allocation of their assets in real estate.'

So far, Savills' HNW division has done about 30 deals, mostly in the non-landed private residential sector. A typical investment would be a unit at Four Seasons Park condominium.

Mr Ku says that about 60 per cent of these HNW individuals are foreigners from countries like the UK, Monaco, Hong Kong, Denmark, Japan, China, Indonesia, the US and India.

Perhaps more interesting is that private equity funds are also looking to invest in individual residential units here.

In April, French private bank Societe Generale said it would set up a fund that would invest in real estate here and expected to acquire 10-15 residential units.

Savills says that it, too, has seen more interest from private equity funds and is working on at least five such deals. Says Mr Ku: 'The deals under discussion are about $50-100 million each. Some of them are inclined towards commercial properties but since the volume of strata-titled office space and small office buildings is not big and the market not liquid, they are mainly focused on good-quality residential properties.'

Even PropNex, which has in the past been more commonly associated with suburban homes, now has a luxury homes division called Grandeur Homes. Its services, too, have been sought by private banks.

PropNex CEO Mohamed Ismail says that these foreign funds are 'very discreet at this juncture' but expects them to assert their capital, if not their presence, in the near future.

Grandeur Homes was set up in March and has chalked up eight deals since - a fraction of PropNex's total value of property deals, which in June hit $1.2 billion. Mr Mohamed says a foreign fund recently bought into Cyber Jaya, a Malaysian property development it is marketing.

Foreign funds investing in Singapore is not a new phenomenon. Many of the biggest property investments, especially in the commercial sector, have gone to such funds.

However, as Mr Mohamed points out, smaller-sized funds are also looking for a bit of the property action.

'These funds are looking to spend nothing less than $10 million. At the same time, they are not looking to spend more than $50 million either,' he added.