By Roznah Abdul Jabbar
Residential properties in KL are expected to appeal to the Malaysia’s UHNWIs this year with 36% planning to purchase them.
Despite a gloomy forecast, property remains the favoured form of investment for Malaysia’s ultra-high-nettworth individuals (UHNWI), with properties in the retail sector topping the list, according to Knight Frank’s recently released Global Wealth Report 2015.
Knight Frank’s Asia Pacific Head of Research, Nicholas Holt said the current slow market conditions have done little to dent the popularity of property as a top investment choice among the country’s ultra-wealthy.
The UHNWI group is defined by the international property firm as individuals who boast a nett worth of at least US$30 million (RM110.85 million), excluding the value of their principal residences.
“This growth in wealth is certainly impacting prime residential markets across Asia and Australasia, with the region’s key cities and second home destinations seeing strong price growth over the last five years,” said Holt.
“This is despite interventions by policymakers in a number of markets designed to slow price growth and curb foreign ownership.”
He said that 36% of Malaysian UHNWIs have indicated that they are planning to purchase a residential property in 2015.
Knight Frank Malaysia’s managing director, Sarkunan Subramaniam, said the purchase of those residential properties will be mainly concentrated in the Klang Valley.
He said locations such as Iskandar Property still top pick for Malaysia’s ultra-wealthy
Malaysia will also draw some attention, as some recent launches there offer attractive pricing and accessibility. Sarkunan added that according to the 2015 Attitudes Survey, which was based on the response of almost 500 private bankers and wealth advisors, UHNWIs have shown particular interest towards commercial properties, with retail units being the most favoured.
Holt concurred that almost 90% of the respondents agree that Malaysia’s ultra-wealthy people are becoming more interested in retail or shoplot purchases.
“Most UHNWIs said they are inclined to invest in retail property, followed by residential and offices,” he said. Holt pointed out that prime residential prices in Kuala Lumpur will increase by 0.5% due to a “flat market” scenario, with landed properties being stronger than others.
Meanwhile, the prime residential price in Singapore is recorded to have dwindled by as much as 12%.
The wealth report said that Malaysia saw a remarkable 136%t increase of UHNWIs between 2004 and 2014, and this number is expected to grow by 42% within the next decade, from the current 514 to 814 individuals.
Holt said this is compared against a global average of 34% and 48% within the Asian region.
“Amid current wealth trends, there are still very positive long term signs for the Malaysian economy and potential for wealth creation,” he said.
He said that the country saw 2.7% growth in 2014, which is lagging behind previous years probably due to the dropping value of the ringgit and the falling price of oil worldwide.
“This environment is likely to prompt Malaysia’s UHNWIs to look at more investment opportunities abroad as a means to preserve their wealth,” said Sarkunan.
“The current economic climate will further see Malaysian capital moving towards safe havens such as London, New York and Melbourne. We are also noticing that Malaysians are taking bigger interest in US real estate,” he said.
Echoing this sentiment, Maybank Bhd’s Head of High Networth & Affluent Banking Community Financial Services, Eunice Chan, said there has been a tremendous growth in overseas property loan applications by the country’s high-nett-worth individuals.
“Maybank has recorded RM600 million worth of related mortgage financing mainly for properties purchased in London since the launch of the Maybank Overseas Mortgage Loan (MOML) scheme in 2011” she said.
Chan noted that despite the moderation of growth in Asia, the demand for prime property overseas remains resilient and it is one of the key investment avenues for the wealthy.