Asian Investors Less Keen on Property Than European Counterparts

Posted on 04. Apr, 2014 by in General

According to a report from Savills, an international adviser on real estate matters, Asian investors are less quick than their European counterparts to take up property investments. This is in spite of the emergence of many internationally-attractive property investment opportunities in Asian markets such as Thailand.

According to the report, which was titled “Around the World in Dollars and Cents,” European investors tend to pump around 31% of their wealth into real estate investments. This compares to just 27% for Asian investors, and only 26% for investors in the Middle East.

Investment opportunities such as properties are being taken up as “safe haven” investments by many of the world’s wealthiest investors. Property investments run the full range of the property market, encompassing residential premises, commercial property, holiday homes and tourist accommodation.

The discrepancy between investment habits of Asian and European investors has surprised many, as Asian markets have seen the emergence of some very exciting opportunities. For example, Thailand’s tourist trade has thrived in recent years, and this has created a boom in demand for properties for sale in Thailand the country’s major cities and other tourist spots such as Phuket.

Thailand’s markets for tourist accommodation, residential properties, and commercial premises have all seen soaring demand, often in excess of supply, as a result of the tourist trade and the resultant boost to the economy and job creation. Some properties have seen returns as high as 12%, with around 7% common for hotels and serviced apartments. Property funds traded on Thailand’s stock exchange have been delivering similarly strong results. Annual yields have been in the region of 6-8%.

These have attracted investors from around the world, but it seems that local investors have been slower to take up these opportunities on their doorsteps than far-flung international buyers. However, the emergence of so many strong opportunities in Asian markets may yet turn the tide, particularly with cultural factors sometimes working in favour of overseas property investment. According to Sorachon Boonsong, Baker and Mckenzie’s head of real estate at their Thai office, has suggested that a cultural love of property may be a factor driving investment as well as capital gains and high returns. He says that Thai and Chinese investors, in particular, “love land so therefore we see occupying land as a signature of success and wealth.”  Mr Sorachon also pointed out that “a fair amount of return” is earned by Asian investors across the region.

Aberdeen Asset Management Asia Ltd’s Milan Khatri, meanwhile, said that Asian investors may also look to broaden their portfolios with a more diverse range of assets. Mr Khatri, head of property research at the firm, highlighted volatility differences between property assets and other investments, and predicted further value increases over the coming 12-18 months.

Comments are closed.