A Barclays report has found that affluent investors, with $800,000 or more to invest, plan to load up on property investments.
The reason is simple — they expect property to outperform other asset classes. With 10-year treasury yields at 3.21% it seems like a decent bet in terms of property’s potential price appreciation. Yet given the tax and maintenance liabilities of property, it doesn’t seem such a sure thing.
Bloomberg: Twice as many people plan to raise their investment in commercial and residential property as intend to reduce it, the Barclays Wealth unit said in an e-mailed statement today. The richer the individual, the greater the proportion of wealth is placed in real estate, the survey found.
Real estate investment among wealthy individuals is set to rise to 30 per cent of the average portfolio for the next few years from 28 per cent now, according to the survey. That excludes properties used as a principal residence. Most rich people, other than the extremely wealthy, should have no more than 10 per cent of their assets in property, said Dicks.
“An emotional attachment to bricks and mortar,” can mean that rich investors are often unwilling to sell real estate at short notice and may be less rigorous in measuring its performance as an asset, according to the report.
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