Wealthy still hooked on real estate

By By Larry Schlesinger | 13 Oct 2009,, 13 October 2009

As mortgage research points to a return of property investors, the latest Asia-Pacific Wealth Report reveals that a strong appetite for real estate remains among the country's rich.

Released today by Merrill Lynch Global Wealth Management and Capgemini, it forecast that Australia's high net worth individuals (HNWI) will hold nearly a third of their financial assets in real estate in 2010 - more than any other asset class.

While the figure is down on the 41% real estate holding of HNWIs in 2008, it is higher than the 28% reported for 2007 before the GFC took hold.

The next biggest asset class for HNWIs in 2010 is expected to be equities (29%) followed by cash/deposits (22%) and fixed income securities (13%).

Chris Selby, managing director and head of Merrill Lynch Global Wealth Management Advisory Australia, said in 2008/2009 there had been a "flight to safety" in terms of where HNWIs were investing and a focus on home markets.

At the same time he noted a "continued love affair with real estate" among Australia's HNWIs.

According to the report, Australia has the third highest number of HNWIs in the Asia Pacific region with 129,000 having net assets of at least US$1m (excluding their primary residence and consumables) behind Japan (1.4 million HNWIs) and China (364,000 HNWIs).

Australia's rich hold a combined wealth of US$380bn, 5% of the region's wealth.

The combined wealth of Asia's HNWIs is expected to grow by 8.8% from 2008 to 2019 above the global average of 7.1%. By 2013 the Asia-Pacific is forecast to overtake North America as the largest region by wealth measurement.