Wealthy investors regain appetite for property

Confidence in the real estate sector is returning among high-net-worth individuals according to new survey from Barclays Wealth.

Over the next two years, 35% of the survey’s respondents said they plan to increase the proportion of their portfolios dedicated to real estate, excluding their primary residences.

The average allocation to real estate among respondents was 28% internationally and 23% in the US. Investors in nine out of ten countries expect to increase their allocation to real estate by 1% to 4% over the next two years, raising the global average allocation to 30%.

Investors who plan to increase their real estate stakes believe that the asset class holds better long-term prospects than other more complex financial instruments, which many blame for igniting the financial crisis. Additionally, thanks to the recent turmoil in nearly all real estate markets around the world, investors believe there are many bargains to be had in the property sector.

Residential more attractive than commercial property

According to the report, investors are less enthusiastic about commercial real estate, due to rising unemployment rates worldwide but 45% of respondents believe there are significant opportunities in residential markets, although tight credit markets are inhibiting their ability to take advantage.

US, UK, China & India are favoured markets

More than three-quarters of respondents predominantly invest in their domestic market. However, when asked what other markets are attractive to them right now, the U.S. ranked number one, followed by China, the U.K and India, in that order. U.S. real estate is particularly appealing because of recent price declines, the falling dollar and long-term positive prospects for the U.S. economy.

The report, commissioned by Barclays Wealth and written by the Economist Intelligence Unit (EIU), was based on a survey of more than 2000 individuals in 10 countries with over $800,000 in investable assets.

Source : Global Edge – 1 Dec 2009

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