Asia’s ultra-rich like Singapore as principal residence

Published 7 April 2011
The Business Times
By Teh Hooi Ling

Besides stable political, economic conditions, there’s favourable taxation

The availability of top quality education has made Singapore the second top location for the ultra-rich in Asia to buy second homes. This is particularly true among the Chinese and Indians, according to Citi Private Bank-Knight Frank Wealth Report 2011.

Global cities for ultra high net worth individualsAnd when it comes to principal residence, Singapore is the first choice for Asia’s ultra-high net worth individuals (UHNWIs), especially Indians. In addition to the stable political and economic conditions, Singapore offers favourable taxation policies to these wealthy individuals, said the report.

The pricing of luxury properties here is also much lower than in other markets such as Hong Kong, Tokyo, Paris, London and Monaco.

The report was based on an online survey at the beginning of 2011 by 160 Citi Private Bank wealth advisers representing almost 5,000 UHNWIs from 36 countries. The average worth exceeded US$100 million.

According to the Attitudes survey, education is one of the primary reasons for second-home purchases, especially among East Asian UHNWIs.

Said Rupert Hoogewerf, publisher of the Hurun Report which lists China’s rich: ‘A property for (university-going) children to live in is an obvious step to take and a very popular investment option. Anecdotal evidence indicates that the condition of property markets can be an influencing factor when universities are being assessed.’

Besides the UK and the US, other top choice locations for education are Canada, Australia, New Zealand, Hong Kong and Singapore.

Meanwhile, Singapore has retained its position as the fourth top global city for the super rich. It, however, risks falling to the sixth spot as Shanghai and Beijing are seen rising up the ranking in the next 10 years.

The report also showed that property remains very much a part of the rich’s portfolio. Other than their own businesses, brick and mortar remain the second most trusted place for the world’s ultra-rich to store their wealth. About 35 per cent of the portfolio of the world’s UHNWIs are allocated to property.

And property is not about to lose its appeal any time soon, despite the severe correction in the West following the global financial crisis and the record prices in the East. Enthusiasm for this asset class has increased in the last five years.

In fact, of all the asset classes out there, the world’s ultra-rich are most enthusiastic about property, more so than equities, government bonds, corporate bonds, commodities and gold.

Revealing the cultural bias of East Asians for property, the UHNWIs in this part of the world are as enthusiastic about property as they are about their own business. The rich from other regions rank their own business higher.

Of the various property sectors, direct ownership of residential property is the most favoured, with 28 per cent of those surveyed considering buying another second home outside their country of residence.

Broken down into the various regions, more of the rich from Africa, Russia and Commonwealth of Independent States, Middle East, Europe and East Asia are considering buying a second home outside their home countries.

Overall, the survey showed the continued shift of wealth to the East.

Stephen Wall, director of consultancy Scorpio Partnership, said that his firm’s Wealth Distribution Model confirms that one big story is the money now sitting in the Asia-Pacific – US$11 trillion.

‘While still third behind North America (US$13 trillion) and Europe (US$11 trillion), it is fast catching up. Bar a huge economic crisis, it will snatch second spot from Europe by the end of the year. North America – and the world lead – is in its sights,’ he said.

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