Real estate may be a booming market for ultra-high-net-worth investors in Asia, according to a new study.
Asian countries are being affected by the economic slowdown plaguing the U.S. and Europe, but the long-range outlook in Asia is good, particularly for real estate investments for ultra-high-net-worth individuals, according to the study by Wealth-X.
Wealth-X provides research on ultra-high-net-worth individuals and families throughout the globe. The latest study, Real Estate and the Asian UHNW Investor, focuses on the real estate investment market in China, Hong Kong, India, Indonesia, Malaysia and Singapore.
Asia has 11,730 ultra-high-net-worth individuals, defined as those with $30 million or more in assets, who invest in real estate, with a combined worth of $1.9 trillion. The has invested a total of $250 billion into real estate.
Investment prospects in Asia will continue to grow because of the urbanization of the region and the growing middle-class, said Wealth-X. Returns on a balanced portfolio of commercial and residential real estate properties in the six prime areas that make up the Asian market returned an average of 9.3 percent per year since the start of the global financial crisis, according to the study.
"That an estimated $70 billion in investment flows into real estate in 2011 were directly attributable to ultra-wealthy investors indicates the strength of the market and the potential value of organizations who offer real estate specific solutions and client service," said Wealth-X CEO Mykolas D. Rambus.
"Asian ultra-affluent investors have long favored real estate as an investment asset class of choice," the report stated.
"Real estate is expected to remain an asset class of choice for an expanding base of ultra-high-net-worth investors, who look to capitalize on the expansion of Asian economies that is fueling demand for office buildings, hotels, retail space and housing," the study continued. "The opportunity to engage ultra-affluent real estate investors remains lucrative."
China, the country with the largest ultra-affluent population, is in a price correction phase but should avoid a situation like the U.S. real estate bubble because of urbanization trends, rising income levels and other factors, the report said.
Chinese ultra-wealthy investors, as well as those from other countries, are diversifying to places like Singapore, where the number of real estate transactions increased by more than 37 percent between the first and second quarters of this year.
Likewise, Indonesia is expected to see a record inflow of nearly $22 billion in real estate investments this year.
Population growth and urbanization is going to push rapid real estate investment in India, the country with the second highest number of ultra-affluent real estate investors, according to Wealth-X.
-Karen DeMasters