Chinese invest more into global residential lands

By Li Ying Source:Global Times Published: 2017/6/15 16:48:39

Nicholas Holt, Asia-Pacific Head of Research at Knight Frank Photo: Courtesy of Knight Frank

The number of ultra high-net-worth individuals (UHNWI) in Asia will continue to surge in the next decade and purchasing housing is a main component of their investments, according to Nicholas Holt, Asia-Pacific Head of Research at Knight Frank, an independent global property consultancy based in London.

"These individuals allocate a lot of their assets to property. In Asia, about 80 percent of their wealth goes to property," said Holt at the company's Beijing office.

"It can be a home or a second home for investment as a residential home or even commercial."

UHNWI refers to people with a net worth of $30 million or more, excluding their principal residence. The recently released Wealth Report 2017 by Knight Frank, which tracks the growing super-rich population in 125 cities across 89 countries, suggests that China ranks 2nd in the world in terms of absolute increase in UHNWI population over the next 10 years, and the UHNWI living in Chinese mainland own three homes on average.

"Property is the safest investment," said Holt. The Knight Frank City Wealth Index uses four critical measures, including current wealth, investment, connectivity and future wealth, to identify the cities that matter to the wealthy.

Results found that London and New York are the two top locations drawing the wealthy. Asian cities including Hong Kong, Beijing and Shanghai are taking on an increasing leading role in the city wealth index.

Apart from property, luxury consumption near the top of the investment list for UHNWI, according to the Wealth Report 2017, are automobiles, wine, coins, jewelry and artwork.

Meanwhile, the Chinese real estate developers are accelerating their business expansion in overseas property markets.

Holt said that 80 percent of the total cross-border investment into residential lands within the Asia-Pacific region has been from Hong Kong and Chinese mainland developers.

"Hong Kong is investing into Chinese mainland; and Chinese mainland is investing into Malaysia, Singapore, India and other regions," he explained.

The active purchases are featured by a recent high-profile bid, in which a pair of Chinese developers - a joint venture between Logan Properties and Nanshan Group - offered $718 million for a residential site in Singapore, according to a Bloomberg report on May 18.

Apart from Singapore, Australia and Malaysia are among the hot spots the Chinese developers prefer to invest in with the overseas real estate market, Holt said.

"About 36.5 percent of overseas investment by Chinese developers has gone into Australia, but that is mainly focused on Sydney and Melbourne," he said.

Based on the company's global research, Holt pointed out that Nairobi in Kenya, which has already been a popular slot for Western developers and UHNWI, is a city with investment potential that has been underestimated by the Chinese.

"Nairobi has recently come to a sort of regional hub for both business and leisure," he said. 


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