SINGAPORE
luxury property remains resilient despite the government's cooling
measures, as the wealthy look to the city as a 'safe haven' and a
lifestyle destination.
This is one of the highlights of Knight Frank's The Wealth Report 2012, produced in collaboration with Citi Private Bank.
A survey of 4,000 individuals worth an average of US$100 million each
cites Singapore as the fifth most favoured second home location across
all respondents. In pole position was the United States, followed by the
United Kingdom, France and Spain.
In terms of quality of life, Singapore took second place, after London.
The study reflects the growing shift in emphasis towards the East,
where the number of 'centa-millionaires' - defined as those with a net
worth of at least US$100 million in investible assets - is growing
rapidly.
For instance, the current ranking of the most important
global cities finds Singapore in fifth spot, after London, New York and
Hong Kong. Shanghai and Beijing were ranked eighth and ninth,
respectively.
In 10 years, based on the expectations of survey
respondents, Singapore continues to take the fifth spot. But Beijing and
Shanghai moved up to third and fourth places, respectively.
In
terms of the rise in the number of centa-millionaires, the fastest
growth by far between 2011 and 2016 is projected to occur in Africa,
South and Central Asia, the Middle East and South-east Asia.
Property remains a favoured asset among high net worth individuals. It
has the biggest share of 31 per cent of portfolios on average, and
equities and bonds have 31 per cent each in 2011. In the Asia-Pacific,
however, property's share of portfolios is higher at 31 per cent, with
equities taking 24 per cent and bonds 16 per cent.
The study
finds that 57 per cent of the ultra high net worth individuals expect to
increase their residential property portfolio. The growing wealth
market has led to the emergence of 'super prime' markets, characterised
by transactions of at least US$20 million each. Of these transactions,
foreign buyers typically account for a quarter. In Asia-Pacific,
Singapore and Hong Kong are super-prime markets, but Shanghai may well
emerge as one too.
The report notes that Asian markets such as
Singapore and China have implemented property cooling measures which
have hit prices somewhat last year.
In Singapore, however, Knight
Frank director of valuation and head of consultancy and research Png
Poh Soon believes the demand for prime residential property among
foreign buyers remains intact.
'The trend among foreign buyers
implies that notwithstanding the Additional Buyers Stamp Duty (ABSD),
ultimately the rich will buy Singapore property. We are confident of the
long-term performance of the luxury residential market.' This, he
added, is due to a number of factors such as Singapore's stable
political and economic environment; its safe haven status for capital
and it offers an attractive lifestyle.
In terms of investment
themes, Citi Private Bank head of investment (Asia Pacific) Debashish
Duttagupta said clients should 'intensify their quest for yield'. 'It's
our view that rates will stay low and risk free yields will stay low.
This has deep implications for real estate markets.' With this backdrop,
he adds, financial investments will also continue to outperform.
He suggests that clients could construct real estate investments
including commercial property that behave like a fixed rate bond in
terms of its yield.
Dividend stocks are also an attractive
option. 'It does not mean that in a market rally dividend stocks
underperform. Our studies show that when equity markets rally strongly,
dividend yield stocks outperform growth and value stocks.'
Source: Business Times