Investors Eye Another Helping of Property: Barclays
With the average high net worth investor already holding 28% of investments in various types of property, the long-term advantages of this investment type may make wealthy investors reach for another helping of property investments, according to a survey by Barclays Wealth. The survey of 2,000 high net worth individuals with assets eligible for investment ranging from £500,000 (US$822,000) to in excess of £30m on average allocate 28% of investments in property, Barclays Wealth said. Individual investors' ideas of the optimal allocation of property in total investment varies, from 6-8% offered by one participant in the survey and a partner at a multi-family office, to 50% preferred by another investor that favors property assets. “There is no doubt that a certain amount of property can provide return enhancement and diversification benefits in most investors’ portfolios,” says Philip Jeffcock, director of real estate at Barclays Wealth. “The proportion of wealth allocated to property should be reasonable given an investor’s liquidity requirements, and their ability to deal with the possibility that they might have to sell an asset with poor liquidity when things go bad.” Investors are considering increasing their property allocation, with high net worth investors planning a slight increase over the next two years, Barclays Wealth said. The allocation may increase from 28% to 30% on average, as investors consider property a more attractive long-term investment than other asset classes. "This suggests continuing uncertainty about the trajectory of financial assets and a desire for more tangible, ‘straightforward’ investments after the turmoil of the financial crisis, which many people perceive to have been caused by complex financial instruments," Barclays said. Thirty-nine percent of survey respondents indicated they see residential property as a viable investment due to the potential for income through rental. Nearly 29% see the potential for capital gains as a key advantage to investing in residential property. Another 28% of respondents see long-term performance posing an advantage for residential property. Write to Diana Golobay.