I was having a discussion with a group of close friends who happened to be property investors as well. One of them told me of a friend, Mr. B who seems to be buying properties non-stop. Mr. B happens to be a Malaysian working in China and earning US$ currently. That’s great news because this Mr. B may not love to be staying in China forever. When we have enough inputs (EARNINGS in US$), we should quickly invest them. Whether it’s property or some other types of investment matters little. Idle money creates nothing.
Then, we started talking about Mr. P who owns just ONE condo despite having a job which pays very well. His wife earns just as much as him and they live in their little home with their 5-month old baby. Mr. P is however looking for a semi-detached landed property and his budget is RM2 million. Yes, we can imagine how cash-rich is Mr. and Mrs. P. Too bad, for too many years, they did not do anything and is only starting today. Of course, it may also be because both of them were working so hard that they do not have time to think about investment. Both these are extreme cases. Many among us are in between.
Well, for the ultra-high net-worth individuals (UHNWIs) in Malaysia, they LOVE properties. According to a survey by Knight Frank based on the views of 400 private bankers and wealth advisers who, between them, manage assets for about 45,000 ultra-high net worth individuals. The ultra-rich are defined as those with minimum US$30mil (RM117 million) in investable assets. Analysing deeper into the Malaysian UHNWIs, their worries are succession/inheritance issues, global economy and taxes. (Somehow, I think family businesses may be causing the first worry. Most probably the business was started by the father or grandfather. Global economy is not hard to fathom, Malaysia remains a small nation affected by whatever is happening in the world today. Taxes is something I do not really understand yet. Perhaps that’s why I am not under this category. Haha)
More importantly, 65 percent of Malaysian respondents said asset allocation to residential property had increased over the last decade. At the same time, the same percentage said allocation would also increase over the coming 10 years. This is the highest seen across the ultra-rich in Asia-Pacific for both decades. Yes, Malaysian UHNWIs loves properties! If they do buy overseas, their favourite foreign property destinations are ranked as follows: Melbourne followed by London and Singapore. (Singapore is a natural choice but if I become a UHNWIs in about 188 years, I think I will not include it within my top 3 choices.Major Australian cities would be a choice but beyond London, I would love some other cities in the UK too. I prefer 4 seasons instead of HOT, HOT and HOT all year round.)
The question is thus why should we shy away from property as an investment when all those who are doing way better than the majority of the middle-income Malaysians are putting a high priority in property? In case some still prefer to debate / argue that these UHNWIs have more money and thus could diversify more, please continue debating with others. The only reason why we may have more in future than what we have today is because we diversified what we have to earn more of what we do not yet have. Happy investing.
written on 22 Apr 2016
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