Asians lead private wealth flows into property
Wealthy Asians have been the main drivers of the swift growth of investment into property since 2007, with flows from Chinese individuals rising particularly fast, according to new research.
Asia-Pacific private wealth investment into global real estate has more than trebled to over $150 billion in 2012 from almost $50 billion in 2007, says a report* from property firm Savills and research house Wealth-X.
Over the same period, private wealth flows from Europe and the US into property fell from around $50 billion to some $25 billion and from about $150 billion to $90 billion, respectively.
More specifically, mainland China, combined with Hong Kong, is the largest source of cross-border real estate investment in the world after the US. In 2013 to October, there were in $23.7 billion cross-border flows from China and Hong Kong.
Money invested directly from Hong Kong is down 42% on 2007 volumes of around $22 billion, but Chinese direct investment is up 1,165% to around $7 billion, admittedly from a very low base. For example, Chinese buyers accounted for 12% of international residential property buyers in the US in 2013, up from 5% in 2007.
Underlining the importance of property to Asians, the proportion of real estate as part of total wealth held by ultra-high-net-worth individuals (UHNWIs) in the region (excluding the Middle East) is around 27%, significantly higher than for investors in any other region.
The figures are 17% for Oceania, 14% for Africa, 6% for Europe, around 5% for both Latin America and the Middle East, and 4% for North America.
Moreover, in 2007 Asian participation in big-ticket ($10 million-plus) commercial real estate deals accounted for 22% of the global market by value; between 2010 and 2012 it has averaged 50%. Most of that increase has come from the private wealth sector. At least 45% of all big-ticket property deals in Asia were done by private individuals and private companies.
It’s not surprising that this is the case, since around 7% of UHNWIs in the region made their fortunes from the sector, says the report. That’s a higher proportion than in any other region apart from Oceania. And Asian UHNWIs have made more money from property than other nationalities.
*‘Around the world in dollars and cents: How private money moves around the real estate world’, published yesterday.