Wealthy Asians have been the main drivers of the swift growth of investment into property since 2007, with flows from Chinese individuals rising particularly fast, according to new research.
Asia-Pacific private wealth investment into global real estate has more than trebled to over $150 billion in 2012 from almost $50 billion in 2007, says a report* from property firm Savills and research house Wealth-X.
Over the same period, private wealth flows from Europe and the US into property fell from around $50 billion to some $25 billion and from about $150 billion to $90 billion, respectively.
More specifically, mainland China, combined with Hong Kong, is the largest source of cross-border real estate investment in the world after the US. In 2013 to October, there were in $23.7 billion cross-border flows from China and Hong Kong.
Money invested directly from Hong Kong is down 42% on 2007 volumes of around $22 billion, but Chinese direct investment is up 1,165% to around $7 billion, admittedly from a very low base. For example, Chinese buyers accounted for 12% of international residential property buyers in the US in 2013, up from 5% in 2007.
Underlining the importance of property to Asians, the proportion of real estate as part of total wealth held by ultra-high-net-worth individuals (UHNWIs) in the region (excluding the Middle East) is around 27%, significantly higher than for investors in any other region.
The figures are 17% for Oceania, 14% for Africa, 6% for Europe, around 5% for both Latin America and the Middle East, and 4% for North America.
Moreover, in 2007 Asian participation in big-ticket ($10 million-plus) commercial real estate deals accounted for 22% of the global market by value; between 2010 and 2012 it has averaged 50%. Most of that increase has come from the private wealth sector. At least 45% of all big-ticket property deals in Asia were done by private individuals and private companies.
It’s not surprising that this is the case, since around 7% of UHNWIs in the region made their fortunes from the sector, says the report. That’s a higher proportion than in any other region apart from Oceania. And Asian UHNWIs have made more money from property than other nationalities.
*‘Around the world in dollars and cents: How private money moves around the real estate world’, published yesterday.