About 26% of Malaysian ultra high net worth individuals (UHNWIs) are considering changing domiciles – the second highest rate in the world after China, at slightly over 30%, said Knight Frank Malaysia managing director Sarkunan Subramaniam.
He said the lack of opportunities in business and education could contribute to this figure, despite the government trying hard to improve these areas, he said at the launch of “The Wealth Report 2016” today.
“This trend will continue as Malaysians have become more and more international. Sometimes, it is possibly due to lack of opportunities here. Of course, our government is trying to improve [this situation] and this could be one of the push factors [to encourage Malaysians to remain in the country],” Sarkunan said.
He said if Malaysia continues to be not as liberal – in terms of doing business – as it used to be, it could result in more Malaysians moving to other more liberal countries in the future.
Ample business and education opportunities were available in cities such as London and New York. These were considered as pull factors that were luring wealthy Malaysians to leave their home country for greener pastures abroad.
In 2015, 2,206 EPF members took out a total of RM154.6 million before leaving the country, EPF chief executive officer Datuk Shahril Ridza Ridzuan was reported as saying last month.
This number was 23% more than the previous year, when there were 1,787 withdrawals totalling RM99 million.
More than 2 million Malaysians are estimated to have emigrated since independence in 1957.
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Knight Frank Malaysia highlighted that property remained a hugely important element of Malaysian UHNWIs investment portfolios despite the sharp decrease in the number of Malaysian UHNWIs last year.
“There are 35% of (Malaysian UHNWIs’ investment) portfolio allocated to property. We know that property is extremely important for Asians, especially to Malaysian UHNWIs.
Malaysian (UHNWIs) always have more property than (other) Asian countries,” said Knight Frank Asia Pacific head of research Nicholas Holt.
However, 65% of Malaysian UHWNIs have increased their asset allocation to residential property in the past 10 years, and 65% of them are ready to increase their allocation in the next 10 years.
“In fact, 39% of Malaysian UHNWIs are considering a residential purchase in 2016, while only an average of 29% of UHNWIs worldwide are considering that,” Holt noted, adding that Malaysian UHNWIs own more properties on average.
The report showed Malaysian UHNWIs own 4.7 properties on average, while the global average is 3.7 and Asia's average is 3.92.
Sarkunan said Malaysians continue to put more faith in brick-and-mortar because property has given them very good returns over the last decade.
“We believe property will continue to do so (giving good returns) in the next 10 years. Property has consistently outperformed many other asset classes in Malaysia,” Sarkunan reckoned.
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Sarkunan noted that Malaysian UHNWIs have a growing appetite for properties abroad, particularly in London, United Kingdom and Melbourne, Australia.
Concurring this is Knight Frank Malaysia international project marketing senior manager Dominic Heaton-Watson who said that London and Melbourne both are the favourite property investment cities for Malaysian UHNWIs.
“They love London and Melbourne for their higher education standard, business environment, geography strength and it is a safe haven. Generally, this trend has not changed over the years,” said Heaton-Watson.
“Malaysians have become much more international today. Malaysian developers are also developing property projects overseas, so this is one of the reasons why Malaysians are buying property overseas (from local developers with projects abroad and to move out from Malaysia),” Sarkunan added.
“However, I don’t think 26% of them seeking to change domicile is very significant in the global market.”
As at last year, there were 993 UHNWIs in Malaysia, down by 15% from a year ago, which is the most among the 14 surveyed countries.
The report defined a UHNWI as someone with a personal net worth of over US$30 million (RM124.3 million), excluding their primary residence.
Besides residential properties, Knight Frank Malaysia capital markets executive director James Buckley said Malaysian UHNWIs are also eyeing overseas commercial property, while it is also one of the preferred commercial property investment targets for global UHNWIs.
“Kuala Lumpur (itself) is seeing rising new supply of commercial properties in 2015 and 2016, and we do see a gradual increase in interest from ultra-wealthy Malaysians in commercial properties, mainly targeting Malaysia, the UK and Australia,” he said.
News Source: The Edge Property, 15 March 2016