Where to find capital gains for wealthy Asian investors?


When it comes to property investment, the world’s wealthiest people with net assets of US$30 million and above acquire residences as “safe havens” to protect and grow their wealth and of the 200,000 or so people in this category the total is almost $30 trillion. Asians that are included in this group hold around a quarter of their total wealth in real estate, compared with nearly a third for Europeans.

The total combined private wealth of Asians of this type have combined wealth of $6.5 trillion and with average holdings over $600 million each. When compared to other assets, such as equities and gold stocks, Asians see least real estate as a good option in realising capital gains.

Globally, the cities where most of these people buy real estate are Moscow, Mumbai and Hong Kong and the major locations that they buy into for “retreat” purposes include the Caribbean and Long Island, with Scotland and Monaco used for “destination” purchases. In Thailand, property funds traded on the SET produce annual average yields of between 6-8 per cent and owners of hotels or serviced apartments in the country enjoy an annual yield of between 7-12 per cent.

China has seen cross-border real estate investment rising swiftly since the end of the financial crisis and, after Hong Kong, China is the second largest global destination for real estate investment with almost $23 billion in deals recorded from China and Hong Kong in 2013. Also, over the past year or so, investors have concentrated on low-risk assets in mature markets such as Japan and Australia.

Condominiums in Indonesia are also an attractive investment, with people likely to purchase units in central Jakarta as second residences and also in the development of commercial properties. Singapore is another destination that has been considered desirable, as property prices in Singapore have risen significantly over the last few years and many have realised large capital gains.

While the London property market certainly retains the highest ranking for international high net worth investment, as the current tax regime poses no particular concerns for investors, it is closely followed by Dubai and Singapore. Thailand, as one of the more prosperous countries in Southeast Asia, is among the top destinations for foreign investors and Bangkok is the city with the fastest evolving real estate market in the country.

However, investors in real estate should consider an ideal point in the market cycle before they buy and, with many Asian residential markets having overheated in the past, Bangkok is looking promising once the country settles down into normalcy.