The Wealth Report – An Asia Pacific Perspective: Prime residential remains resilient for Malaysian investor

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15 APRIL, KUALA LUMPUR – Investing in prime residential remains one of the preferred investment priorities for the Ultra-High-Net-Worth Individuals (UHNWIs). According to the findings and insights of Knight Frank survey, the interest in residential investment has shifted the paradigm positively despite many countries are seen with movement restrictions due to the COVID-19 pandemic. The findings came from over 600 private bankers and wealth advisors from around the globe representing high-net-worth clients with a combined private wealth of over US$ 3.3 trillion. Among them, respondents for Malaysia sentiment were shared by private bankers and wealth advisers from UOB Private Bank.

This year, Knight Frank’s attitude survey brings evolution and a new perspective on wealth. According to Knight Frank’s global research team, the biggest potential influences on wealth creation, behavioural shift, and the changing demands on the prime property have exemplified a different acceleration of home buying trends.

The global response to the pandemic has supported the wealthy and emerges the real estate and investment behavioural. The low-interest-rate environment, increase in fiscal stimulus, and surge in asset prices have resulted in the world’s ultra-high-net-worth population increasing by 2.4% higher over the past 12 months. The Knight Frank Wealth Sizing Model also predicts that the global population of the ultra-high-net-worth will grow over the next five years with Asia emerging as the fastest growth in UHNWI at 39% compared to the 27% global average, while the number of millionaires is forecast to rise by 41%. Through that, the upsurge of interest for post-pandemic investment has increased significantly to 76%.

The growth in wealth of Malaysians

Sarkunan Subramaniam, Managing Director of Knight Frank Malaysia

Sarkunan Subramaniam, Managing Director of Knight Frank Malaysia shares, “the growth of wealth in Malaysia shows a healthy increase of 8% from the year 2015 to 2020. Despite the decrease of 8.3% from the year 2019 to 2020 that was possibly caused by the uncertainties during the pandemic period, we foresee there will be a significant recovery of 36% in the growth of wealth for Malaysian, specifically the high-net-worth-individuals (HNWI) in the upcoming five years.”

Growth of wealth for the High-Net-Worth-Individuals (HNWI)

Source : : Knight Frank Data Source

Asia had seen a significant increase in UHNWI compared to the global average. Referring to the table below on the Attitude Survey by wealth professionals in Malaysia, there was a surge of 36% for the UHNWI in the year 2020, whereas 28% have responded to a wealth decrease in the same year.

Sarkunan added “Although there was a fall of 29% in wealth for Malaysian from the year 2020 compared to 2019, it is forecasted that the wealth of Malaysian will pick up and increase another 36% from 2020, making it 72% in the year 2021. This can be attributed to the quick flattening of the infection curve in APAC which contributed to the recovery story and supported growth across the region.”

Table for comparison by year, on average, total wealth change for Malaysia clients

Source: Knight Frank Attitude Survey 2020

 

The Malaysian home-buying attitudes

Dominic Heaton-Watson, Associate Director of International Residential Project Marketing of Knight Frank Malaysia

During the period of lockdown and grounded by travel bans, the desire to live in a greenery open space that enables a better work-life balance has never been greater. The wellness of the family is one of the main criteria for many homebuyers in Malaysia when looking to upgrade their main residence or purchase a holiday home. As a result of the bullish stock market, luxury buyers are taking this opportunity to upgrade their main residence or invest in a secondary residence.

Dominic Heaton-Watson, Associate Director of International Residential Project Marketing in Knight Frank Malaysia commented “In the land down under, Australasia was one of the top performing regions, averaging an annual growth of 4.9%, due to the surge of pent-up demand as lockdown eased and homeowners re-evaluated their lifestyles. Perth (+4%) was Australia’s frontrunner and remained a popular destination for Malaysian investors, while Sydney (+1%) registered its highest volume of prime sales ever in Q3 of 2020 – many of which were at Crown Residences at One Barangaroo, Sydney.”

“This outlook is further reinforced in Knight Frank’s survey of over 600 private bankers, wealth advisors, intermediaries, and family offices, the Attitudes Survey*, which revealed that one in five UHNWIs in Asia-Pacific is planning to buy a new home in 2021. “The biggest reason being upgrading of their main residence domestically, followed by a holiday home either domestically or in the likes of the US, UK, and Australia – 3 of the top 5 destinations for Malaysians who also look at overseas education for their children” commented Heaton-Watson who advises clients in Malaysia on their overseas property requirements.

Where are the UHNWI clients planning a home purchase in 2021?

Source: Knight Frank Attitudes Survey

The global uncertainty that the COVID-19 pandemic has caused a change in strategy for the ultrawealthy. Many are planning to invest in additional homes domestically, followed by second homes in cities and countries that fit their requirement and lifestyle in the new normal.

In terms of home attributes, the respondents across Asia prefer a home with their offices within or close by. This is followed by a home with access to transport links (for Asian buyers who prefer urban areas), and homes with an outdoor space within or nearby (for Australasia buyers who prefer rural or coastal areas). Heaton-Watson noted that for Malaysian respondents, air quality, leisure facilities at home, and access to outdoor space nearby were key characteristics sought by home buyers.

When choosing a new home which attributes are most important? (1= most popular)

Source: Knight Frank Attitudes Survey

From evolving trends in private wealth to the latest prime residential index, the future of Asian cities in the post-pandemic era remains an important opportunity for buyers, investors, developers, and advisors who are interested in investing in real estate across the region.


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