Commercial real estate is one of the top two assets, along with equities, that wealthy individuals and their investment advisers are targeting for investment this year, according to a study published by property consultancy firm Knight Frank and Citi Private Bank.
The study showed that wealthy investors plan to allocate around one-fifth of their investment portfolios to commercial real estate and another 19 percent to equities this year.
The study surveyed around 40 investors and 70 investment advisers globally, with each of the investors possessing investible assets (excluding primary residences) valued at more than US$10 million.
Most investment advisers said they would suggest that one-fifth of investment portfolios be allocated to commercial property, with 11 and five percent going to commercial and residential properties respectively.
“Commercial property is a more established investment asset class compared to residential. There is more data available on asset performance, and therefore advisers in particular tend to prefer it,” said Liam Bailey, Head of Residential Research at Knight Frank.
“Property is a huge and important asset class. Most wealth advisers and their wealthy clients would look to have some exposure to this asset.”
Alvin Yip Kwok-ping, Co-head of Investment for DTZ China, said that Hong Kong and mainland China would also see investors choose commercial and residential properties this year.
“In Hong Kong, some buyers have been discouraged from investing in residential properties since the implementation of the special stamp duty last year,” said Mr. Yip.
“So relatively, they would be more interested in commercial property, although both of them are hitting their historic high prices now.”
The study also showed that Monaco remained the most expensive residential location globally, with average prices of luxury properties hitting US$65,600 psm. This was followed by London, where luxury properties are priced at US$56,300 psm.
With an average price of US$27,300 psf, Hong Kong is home to the second most expensive residential properties in Asia and ninth globally, behind Tokyo. In 2010, Hong Kong was the fourth most expensive city in the world.
Source : PropertyGuru – 13 Apr 2011