Investors have seen the value in holding commercial property in their portfolios for some time. Diversifying investments is an excellent strategy since they don’t want to have all of their funds concentrated in stocks and bonds.
London was the most popular choice for investors in 2012
This trend has increased lately, particularly among Asian investors who are taking advantage of the combination of low interest rates and the strength of their currencies to increase their holdings.
Several wealthy individuals who already have invested in residential properties in different countries are interested in diversifying further by adding commercial property to their portfolios.
Joseph Poon, of UBS Wealth Management in Singapore, stated recently that his office is seeing requests from Asian clients looking to buy commercial property in London and Australia. His firm is also fielding inquiries from potential investors asking about properties in the United States and Europe.
Su Shan Tan, of DBS, notes that a number of Asian clients are drawn to commercial property in Britain because they already own homes there and are familiar with the property market in the country.
According to Ms. Tan, some investment has been flowing through the property market in the U.S. Most of it has been through mortgage-backed securities, as opposed to buying assets.
Megan Walters, the head of research for Asian Pacific markets at Jones Lang LaSalle, said that global direct investment increased 24 per cent year-on-year in 2012. The firm is forecasting that 2013 could see a further rise in direct investment.
London was the most popular choice for investors in 2012, with approximately 63 per cent of sales going to foreign buyers.
Ms. Walters went on to say that major markets would continue to perform well because investors are attracted to this sector due to its relatively high yields in comparison to other asset classes.
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