Based on the key findings of The Wealth Report 2016 by Knight Frank, Asia UHNWIs (Ultra High Net Worth Individuals with personal wealth of US$30million) will allocate 35% of their assets in Real Estate (Commercial and Residential Real estate). Primary residence and second homes held a major proportion of their portfolio during the last 10 years and will remain the same for the next 10 years.
Among the 400 respondents to Knight Frank survey, 30 represented the Singapore UHNWIs segment in which United Kingdom and Singapore were the preferred countries for residential property investment. Alice Tan, Head of Consultancy & Research for Knight Frank Singapore commented that “Singapore possesses a conducive business environment, clear regulatory framework and a progressive ecosystem of financial and business services – which have augmented its status amongst the wealthy as a preferred location to live and do business in Asia.
With a surging interest in commercial property, it is predicted that there will be a significant increase in portfolio allocation with offices and hotels remaining as one of the top investment choices. Similarly, United Kingdom remains as the top choice for individuals based in most Asian countries to purchase commercial property. A lack of experience in the specialized commercial market is cited as the key considerations for Singapore UHNWIs.
In regards to the growth forecast in 2016 for prime residential estates, Singapore is forecasted to see a dip of 3.3%. Nicholas Holt, Asia Pacific Head of Research for Knight Frank explained that as Singapore property price movement drop further down, investors will begin to take a cautious stance in property investment especially due to the stock market downturn and cooling measures.
Tay Kah Poh, Executive Director and Head of Residential for Knight Frank Singapore added that since the cooling measures has been implemented, there has been an estimate of 10% to 15% drop in development prices. “Singapore luxury property prices have dropped for several years now, and while the reasons for the fall are still in place – overall slowing economy,volatile financial markets, rising rates and government cooling measures – fundamental value is clearly emerging.”, Mr Tay said. In addition, he also commented that Singapore is in contention to be one of the top global wealth hubs, “This, perhaps could be a precursor to a robust rebound in the Singapore luxury property market when macro-economic conditions turn for the better and/or when the Singapore government reverses some of the cooling measures.”
In the past 10 years, Asia has seen an increase of 134% of UHNWIs and tops the absolute increase in UHNWI population among world regions for the last and next 10 years. Singapore emerged as the second top Asian city with the most number of UHNWIs with 2,360 and Hong Kong is number one for Asia with 3,854 UHNWIs. Mr Holt further elaborated on the wealth distribution in Asia, “Of the 19 countries tracked within Asia Pacific, 12 saw their UHNWI populations fall in 2015, principally as a result of global macro-economic events, including the Chinese slowdown, the fall in the price of oil, volatile equity markets and the strengthening of the US dollar. Looking at a longer time horizon however, Asia especially has been fertile ground for the growth in the number of UHNWIs, with more individuals surpassing the US$30m barrier than in any other region over the last ten years.”
In another segment of the Knight Frank key findings, Singapore has replaced Hong Kong as the third most important cities to UHNWIs in 2016. The survey also asked if New York or London will ever be overtaken in the coming decade, and 48% chose no. Interestingly, Singapore garnered the most votes among the city that could potentially overtake London or New York. Good news to developers around the world is that in 2016, 29% of the UHNWIs are still interested to invest in residential properties, the surest sign that properties are, and will be in demand.
To download the report, please visit http://www.knightfrank.com/wealthreport