Jakarta has been revealed as one of 12 future world cities for secondary market real estate investment.
The report, produced by Candy & Candy, Savills World Research and Deutsche Asset & Wealth Management and published on Friday, identified 12 rising cities that are set to outperform the prime world cities, and show strong residential price growth as they become more fully invested.
It noted how investors are looking at alternatives away from fully valued, established safe havens, both in secondary markets and second-tier cities. Prices in these rising cities are generally much lower than in the world cities, it says, which make them more accessible and attractive to yield seeking real estate investors.
“For many ultra-high-net-worth-individuals real estate has become a unique asset class, but investment to date has focused on prime property in the top-tier world cities which have shown record market growth,” said Nick Candy, Chief Executive Officer of Candy & Candy.
“Real estate will continue to play an important part in global investment with investors now looking beyond established safe havens and prime world cities.”
Yolande Barnes, Director, Savills World Research, who conducted the analysis said: “As prime real estate in many premier cities has become more fully valued, emboldened investors are now spreading their wings and looking for high yielding secondary properties in those cities as well as starting to consider the value of second-tier cities in countries with strengthening economies.
“This more adventurous approach is likely not only to provide higher income returns but also the opportunity for significant capital growth. Real estate values will grow as new cities all over the globe rise on fortune’s wheel. Property rents and values will rise in line with new and growing economic strength.”
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Dario Schiraldi, Head of Deutsche Asset & Wealth Management’s Global Client Group, said: “Our UHNW clients are increasingly seeking locations outside the mainstream to broaden their real estate portfolios. Demand for investment opportunities in both traditional and rising markets is very strong. Real estate fundamentals are improving with the global economic outlook and deal volume is picking up.”
“Beyond the purely economic, the report identified certain characteristics that add to the attractiveness of these cities. Some of those that stand out include English as a first or second language; the presence of new tech industries and financial centres; favourable conditions for international companies; and a large, young and well-educated population.”
The report also examined the property purchasing habits of UHNWIs. Three markets – Germany, Japan and the United States – top the list as the global locations with the highest value of direct real estate investment by UNHWIs. Together they account for 39 percent of all UHNWI global real estate holdings.
The report also identified those locations that have been the biggest recipients of private real estate wealth. Together five cities – Hong Kong, London, Moscow, Singapore and New York – account for 40 percent, or US$2.2 trillion of all global UHNWI real estate holdings. Hong Kong, with the weight of mainland Chinese investment pushing at its borders, receives the most (US$798bn) followed by London, the city that the report identified as having the broadest global reach (US$676bn).
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Andrew Batt, International Group Editor of PropertyGuru Group,
wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
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