ST : Wealthy S'poreans bullish on property

Dec 4, 2009

Wealthy S'poreans bullish on property

But Barclays advises caution as prices may 'moderate' or flatten

By Joyce Teo

WEALTHY investors in Singapore are so keen on putting their millions into pro-perty investments that even giant bank Barclays is urging caution.

A survey by Barclays Wealth has found that Singapore's high net worth individuals are more bullish on the future of the property market than a lot of their counterparts across the globe.

It has also determined that more women than men believe bricks and mortar make a less risky investment than equities.

These investors - their assets range from $1 million to more than $30 million - place about a quarter of their wealth into property, and this is expected to hit 28 per cent over the next two years.

The reason is clear: Singapore's wealthy see real estate as a better long-term solution, but Barclays' experts feel these people need a better balance.

Mr Manpreet Gill, Barclays Wealth's Asia strategist, said: 'The survey reveals that, much like investors outside of the region, Asian high net worth investors are holding a much higher proportion of their wealth in property than we would normally recommend.'

The survey polled more than 2,000 high net worth individuals around the globe, including 125 in Singapore, in August and September. It was commissioned by Barclays Wealth and written by the Economist Intelligence Unit.

It shows that Singapore, Canada and India have a larger number of investors than elsewhere who expect a rise in the value of their property investments over the next two years.

Nearly half of the respondents in Singapore think property prices will likely go up once credit starts to flow freely through the global economy.

Most of them see opportunities in the sector, though a large number feel that tight credit conditions are preventing them from capitalising on the opportunities.

Women are particularly keen. More Singaporean women than men want to invest in property in emerging markets.

The survey has also found that many Singapore investors see rental income as the main advantage of holding residential properties, with the cost of upkeep as the biggest burden.

According to Mr Gill, the momentum in the real estate market, as well as the pickup in residential prices and the improved economic outlook, are driving expectations among property investors.

However, he warns that prices of residential properties in the mid- to high-end segment may 'moderate' or possibly flatten next year due to the large supply coming onstream.

'There's a tendency to be influenced by 2007, when the market was doing very well,' he said.

Property has been a source of new wealth around the world, but it has also proved to be many investors' undoing, Barclays Wealth said in a presentation yesterday.

The good news is that Singapore investors continue to view overseas property markets as offering attractive returns over the next two years, especially in the United States, India and Britain.

This helps to 'avoid excessively concentrating risk in one asset class and region together', said Mr Gill.

Some Singapore investors are, however, prone to developing an emotional attachment to bricks and mortar and may be unwilling to sell at a short notice, according to the survey.

joyceteo@sph.com.sg


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TOO MUCH FOR COMFORT

'The survey reveals that, much like investors outside of the region, Asian high net worth investors are holding a much higher proportion of their wealth in property than we would normally recommend.'

Mr Manpreet Gill, Barclays Wealth's Asia strategist