The rise in wealth of pension funds and high-net-worth investors - worth more than $US30 million individually - will become key factors in commercial real estate markets, according to the Jones Lang LaSalle annual market report.
And the estimated worth of ultra-high-net-worth individuals in Asia Pacific is $6.59 billion, illustrating the scale of capital in Asia looking for a home. This cash, which has already arrived via Asian-based superannuation and investment funds is forecast to double in the coming year. It will target investment-grade assets, such as that by the Far East Organisation, which recently bought the Ausgrid building at 570 George Street.
In Melbourne, the Singaporean Healthway Cor recently bought three properties for a combined $100 million, while GPT is set to buy 750 Collins Street and 50 per cent of 2 Southbank Boulevard, Docklands.
There are market suggestions that a South Korean pension fund is tipped to buy a half
share of the Westpac headquarters at 275 Kent Street, Sydney, in coming months. In its report 2014: The Year of the Push-Pull Market, JLL's Dr David Rees, Australasian head of research and consulting, says the country's commercial property market will continue to be subject to divergent forces, with some new factors and some continuing from 2013.
''The push factors that will lead to increased capital flow into real estate in 2014 include the growth of high-net-worth [HNW] individuals, the expansion of sovereign wealth funds [SWF], growth of funds under management by superannuation funds, increasing portfolio allocations by investors to real estate and away from equity markets, low interest rates, a premium paid for market transparency and an ageing population,'' Dr Rees said.
''The potential new factors impacting on investment into Australia are the rise of HNW individuals and the growth of the SWF sector, while the growth of funds under management and the portfolio allocation tilt by
investors towards real estate are a continuation of the growth in those two trends from 2013.'' he said. ''It is estimated that ultra-high-net-worth individuals [UHNW], with wealth above $US30 million, have a large concentration in the Asia Pacific region [44,000], close to Europe [58,000 UHNW individuals] and about half of the 70,000 UHNW individuals estimated in the US.
''Globally, those UHNW individuals who have made their money from real estate continue to hold around 60 per cent of their wealth in real estate. Real estate has been a key driver of wealth creation for many HNW individuals. Typically HNW individuals are active asset managers and their criteria for asset selection will often differ from conventional institutional investors.''
Ultra rich look to
pour
cash into commercial real estate
photo credit: Stuck in Customs via photopin cc
By Carolyn Cummins, April 9, 2014
Posted on smh.com.au
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