Asia’s ultra-rich turning to commercial real estate investments to buck property cooling measures

The number of ultra-high net worth individuals will surge by 43% in 2023.

Even Asia’s ultra-rich are feeling the bite of property cooling measures. More and more ultra-high net worth individuals (UNHWIs) are turning to commercial real estate developments in an attempt to foil different property cooling measures enacted by Asian governments.

According to Knight Frank’s Global Cities 2015 report, REITs and UNHWIs are the most important players when it comes to funding real estate investments in Asian countries, particularly Japan and Singapore.

“Private wealth continues to be an extremely important source of capital in the real estate markets. Asian HNWIs have traditionally viewed property as a core investment, heavily weighting their portfolios towards bricks-and-mortar. Following the numerous rounds of cooling measures we have seen in the residential markets, an increasing number of private investors have been looking at commercial real estate,” stated Knight Frank.

Here’s more from Knight Frank:

Otherwise, listed and un-listed funds have also been active – with private equity groups from the US such as Blackstone and Carlyle actively buying in the region. In general, foreign (non-Asian) groups, who were more active pre-GFC, have started to come back to the market as demonstrated by M&G’s recent acquisition of two assets in Japan.

In China however, state-owned enterprises remain the key buyers of both development land and income producing assets, with access still proving difficult for foreign groups.

The growth in private wealth in Asia is likely to continue unabated, with Knight Frank’s Wealth Report forecasting a 43% growth in UHNWIs between 2013 and 2023 – a growth in absolute numbers of 17,474 – higher than any other region in the world.

The increasing number of family offices in Asia reflects this growth. These top-tier HNWI investors typically take a longer-term view to investing, with succession planning a core objective. Property either at home or overseas will continue to be high on their agenda.