Australia is the destination of choice for Asian Ultra-High-Net Worth Individuals (UHNWIs) who plan to buy a new home overseas or invest in property in the coming year, based on a Knight Frank survey of 600 private bankers and wealth advisers who between them manage over US$3 trillion of wealth for UHNWI clients. The respondents included private banks and wealth advisers from UOB Private Bank who participated in the survey and shared their sentiments.
According to the Attitudes Survey in Knight Frank's Wealth Report, 25% of Asian UHNWIs, defined as those with net assets of US$30 million or more, plan to buy a home outside their country of residence by 2020, higher than the global average of 22%.
Of those, 45% indicated they would buy in Australia, 33% say UK and 32% chose Canada. These buyers are mostly from China, Hong Kong, Malaysia and South Korea, with one in three indicating their interest to buy a residential property overseas this year or next.
Less than 1 in 20 in Australia and New Zealand plan to buy a home internationally, and 39% indicated they would buy in Australia, according to the survey responses from the wealth managers. Australasians largely prefer to buy in their home country rather than overseas.
"The ultra-wealthy are becoming increasingly strategic in their destination choices, a natural response to global uncertainty and political upheavals. As a result, they are investing in additional homes in cities and countries where they see greater levels of stability," says Victoria Garrett, Head of Residential, Asia Pacific.
"Australia continues to draw significant interest from both domestic and overseas buyers, ticking all the boxes not only for stability, but also lifestyle, education, wealth preservation and capital growth," Garrett adds.
In which country or territory are your clients most likely to buy a new home in 2019/20?
Most likely to buy a new home in : Australia / UK / Canada / US / Singapore Asian UHNWIs : 45% / 33% / 32% / 31% / 23% Australasian UHNWIs : 39% / 34% / 32% / 27% / 8% Global average : 37% / 32% / 19% / 18% / 17%
Source: The Wealth Report Attitudes Survey 2019
Education drives destination choices
A key driver influencing Asian UHNWIs' decisions to purchase property overseas is education. Australia, the UK, Canada and the US have a high number of top-tier universities, and many UHNWIs send their children abroad for education.
As many as six out of ten Asian UHNWIs, notably those from China, Hong Kong, Indonesia, Malaysia and Taiwan send their children abroad for higher education. Among the wealth managers surveyed in Malaysia, 96% of them expect the trend of sending children overseas for university education to continue.
Dominic Heaton-Watson, Associate Director, International Residential Project Marketing, Knight Frank Malaysia, comments, "We have noted this trend strengthening for some time now. It makes a lot of sense to our Malaysia-based clients to purchase a home (a tangible asset) for their Children use while studying in a global city. The truly savvy clients take a medium-to-long-term approach, and make a purchase many years ahead of their children even starting their overseas education."
Beyond homes - property investments
Overall, Asia-Pacific UHNW investors still prefer to invest in their local market. According to the wealth managers surveyed, 71% of their clients from Taiwan and 68% from Australia have property investments domestically. In 2019 to 2020, 43% of their clients from South Korea, 41% from Malaysia and a similar proportion in the Philippines plan to invest in their home country.
For those looking to invest in property (excluding first or second homes) abroad, Australia is also the most popular choice, with 41% of the wealth managers indicating that their clients may invest down under in 2019 or 2020. The UHNWI clients' second choice is the US and their third is the UK.
Heaton-Watson adds, "Malaysian's have long had an affinity with these destinations, in particular Melbourne, New York and London with regards to the quality of education.
Purchasing an overseas property in a city they know so well from personal experience, tends to suggest that knowledge and familiarity, along with language, culture and a transparent legal system play an important role in their decision."
According to the survey, around one in three from China (31%), Malaysia (33%) and South Korea (32%) are likely to invest overseas in 2019 or 2020. When asked about the percentage of clients who have property investments (excluding first and second homes) outside their country of residence, 40% of the managers say Malaysians, 39% indicated Indonesians and another 39% say Hong Kong.
In which country or territory are your clients most likely to invest in property (excluding first and second homes) in 2019/20?
Countries likely to invest in : Australia / United States / United Kingdom
Canada Singapore Asian UHNWIs : 41% / 36% / 32% / 27% / 20% Australasian UHNWIs : 39% / 34% / 32% / 32% / 5% Global average : 42% / 32% / 18% / 18% / 15%
Source: The Wealth Report Attitudes Survey 2019