Rich people prefer investing in property

Rich people prefer investing in property

Dec 2, 2009 - PropertyGuru.com.sg

Rich people are more likely to invest in properties, which are now considered as better opportunities for long-term returns than bonds and stocks, according to a recent survey done by Barclays.

The global survey shows that several people are now planning to increase their investments in commercial and residential properties.

Those with over $800,000 to invest are leading the race for property investments and their willingness to invest in the real estate market has amazed researchers.

“I was surprised how big a share of their wealth property represents,” said Mike Dicks, research head for Barclays Wealth.

With the global recession pushing property prices down in every region except parts of Asia, it is an assumption that properties are now undervalued, which has become one of the reasons for increasing investments.

Property investment for wealthy individuals is set to increase to 30 percent by next year, from the current 28 percent, according to the survey. This does not include properties used as principal residences.

The survey also showed that wealthy investors are unwilling to sell properties at short notice and may be less careful in measuring its performance as an asset.

Investors from the Gulf region as well as in Canada are likely to increase their real estate allocations, with a four percent increase being put into the real estate market.

The survey also indicated that Spain is the only country where most individuals prefer to lessen the proportion of their real estate investments. About 60 percent of wealthy individuals in Spain have more than half of their wealth tied up in the property market.

About 30 percent of Indian and British investors have more than half of their total wealth associated in real estate while 40 percent of the total respondents with over £30 million have a similar allocation.

Three out of four investors said residential property looks attractive while two-thirds prefer to invest in commercial real estate. However, about 75 percent said they feel hampered by borrowing costs.

The United States is currently the most attractive location for real estate investors outside their own country, as it's regarded as having the highest potential for investment returns.