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Title: |
Wealthy Investors Plan to Buy More Real Estate, |
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Author: |
Peter Woodifield |
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Date: |
12/08/2009 |
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Wealthy Investors Plan to Buy More Real Estate,
Barclays Says
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By Peter Woodifield
Nov. 30 (Bloomberg) -- Individuals with more than $800,000 to invest plan to
increase their property holdings because they foresee better long-term returns
than from stocks and bonds, according to a Barclays Plc global survey.
Twice as many people plan to raise their investment in commercial and
residential property as intend to reduce it, the Barclays Wealth unit said in an
e-mailed statement today. The richer the individual, the greater the proportion
of wealth is placed in real estate, the survey found.
“I was surprised how big a share of their wealth property represents,” Mike
Dicks, the London-based head of research at Barclays Wealth, said in an
interview. “It’s not what I would tell grandma. None of our data suggests that
would be a good allocation.”
The global recession pushed down commercial and residential real estate
prices in every region except Asia. The value of U.S. shops, offices and
warehouses fell 21 percent in the first three quarters of this year, following a
12 percent decline in 2008. Belief that properties are now undervalued was
the second most common reason cited for increasing investment.
Real estate investment among wealthy individuals is set to rise to 30 percent
of the average portfolio for the next few years from 28 percent now, according
to the survey. That excludes properties used as a principal residence. Most rich
people, other than the extremely wealthy, should have no more than 10
percent of their assets in property, said Dicks.
‘Emotional Attachment’
“An emotional attachment to bricks and mortar,” can mean that rich investors
are often unwilling to sell real estate at short notice and may be less rigorous
in measuring its performance as an asset, according to the report.
Investors from Canada and the Persian Gulf were the most likely to increase
their property allocations, with an average rise of 4 percent, the report said.
Spain was the only country in the survey where more individuals said they
would reduce the proportion of real estate investment, said the wealth
management division of London-based Barclays. About 60 percent of rich
individuals in that country have more than half their assets in property.
Almost 30 percent of British and Indian investors have more than half their
wealth tied up in real estate. About 40 percent of the total respondents worth
more than 30 million pounds ($49 million) have a similar allocation, Barclays
Wealth said.
U.S. Attractive
Three out of four investors surveyed said residential property is looking
attractive and two-thirds are keen to explore investing in commercial real
estate, the survey said. About 75 percent said they feel hampered by
borrowing costs.
The U.S. was the most attractive real estate market for investors outside their
home country, the survey showed. The country was seen as having the
highest potential for return on investment.
Barclays Wealth surveyed 2,000 people. Forty percent were worth 500,000
pounds to 1 million pounds. An additional 40 percent were worth between 1
million pounds and 10 million pounds. Ten percent had assets of as much as 30
million pounds and the rest were wealthier than that.
To contact the reporter on this story: Peter Woodifield in Edinburgh at
pwoodifield@bloomberg.net.
Last Updated: November 29, 2009 19:00 EST |
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