Malaysia's Ultra-High-Net-Worth Individuals Projected Growth of 31% Between 2018 and 2023
The ultra-high-net-worth individuals (UHNWIs) in Malaysia are now deemed more confident and secure in preserving their wealth compared to the year before.
According to the Wealth Report 2019 by global property consultancy group Knight Frank, 22% of wealth managers are of the opinion that the political and economic environment within the country will make it easier for clients to create and protect wealth in 2019, compared to 11% in 2018.
Knight Frank Malaysia Sdn Bhd MD Sarkunan Subramaniam said it was interesting to know that this was a major factor that made a difference and will likely spill over to the buying of real estate.
“This has to be associated with the change of the government since May 2018 and the confidence among UHNWIs in the present government,” he said at the Wealth Report 2019 media conference in Kuala Lumpur yesterday.
UHNWIs are defined as those with net assets of US$30 million (RM123 million) or more.
Sarkunan said a restoration of demand and confidence in the real estate market is currently apparent, especially with the revival of the East Coast Rail Link project and Bandar Malaysia.
“We can already see the government moving machinery into restoring faith in the infrastructure projects going on in the country; the key crux of why the real estate market will turn for the better towards the end of the year."
“It’s more likely that the residential market will overtake the commercial market. While the government has been focusing on affordable homes, people have turned away from other market segments. This will soon change based on the way investment sentiment is coming along,” Sarkunan said.
Sarkunan said in light of the revival of infrastructure projects, local UHNWIs will also be venturing into the purchase of logistics and industrial spaces.
“These are good assets and will be a competition with industrial properties which are leased out to well-known brands. I foresee the focus moving towards this direction as well,” he said.
Elsewhere, UHNWIs in Australia saw the most significant increase in wealth in 2018 with 93% of advisors surveyed reporting an improvement in their clients’ fortunes, while 72% expect their clients to increase wealth this year.
However, Knight Frank Asia-Pacific head of research Nicholas Holt said wealth managers in China, Hong Kong, Indonesia, South Korea, Taiwan and Singapore expect domestic politics and economic issues to make it a more challenging year in 2019.
“Many of the trends that shaped the global economy in 2018, from Brexit to the US-China trade wars appear to still be prevalent. However, financial markets have long since priced in the implications of these widely discussed events,” Holt said.
United Overseas Bank (M) Bhd head of private bank Dill Choo Chooi Lin said despite the slow global growth, opportunities still abound across equity and fixed income asset classes.
However, investors need to stay vigilant in their investment portfolios to mitigate risk. “Investors should adopt a flexible and diversified asset allocation strategy that allows them to re-allocate between asset classes and geographies,” she said.
Notably, wealthy individuals both in China and Malaysia are expected to increase their exposure in gold, a typical “safe-haven” asset during times of uncertainty.
“Gold is hugely popular as an investment given it is typically viewed as a safe-haven asset. With the US Federal Reserve ending its current rising interest-rate cycle, there has been a renewed confidence in gold,” Choo said.
Meanwhile, the report also showed that Asia’s billionaire population growth is set to outpace other regions between 2018 and 2023.
The report noted the number of billionaires from the region will rise by 27%, surpassing growth in Europe and North America which is projected at 18% and 17% respectively.
For Malaysia, Knight Frank has projected a growth of 31% between 2018 and 2023.
“There were 636 UHNWIs in 2018 and by 2023, it will grow to 830. Out of the 59 countries and territories, eight out of 10 countries by future growth are in Asia, Malaysia occupying the sixth place,” Holt said.