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Worlds rich plan to invest more in property, survey shows

Twice as many people plan to increase their investment in residential and commercial property as intend to reduce, the global survey from Barclays shows.

It is those with more than $800,000 to invest that are leading the property investment race and the extent of their plans for real estate has amazed researchers.

‘I was surprised how big a share of their wealth property represents,’ said Mike Dicks, head of research at Barclays Wealth.

With the global recession having pushed down real estate prices in every region except parts of Asia, it is a belief that properties are now undervalued that was one of the main reasons for increasing investment.
Real estate investment among wealthy individuals is set to rise to 30% of the average portfolio for the next few years from 28% at present, according to the survey.

That excludes properties used as a principal residence.
It also found that 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.
Investors from Canada and the Gulf region were the most likely to increase their property allocations, with an average increase of 4% being put into real estate.

Spain was the only country in the survey where more individuals said they would reduce the proportion of real estate investment.

About 60% of rich individuals in that country have more than half their assets in property.
Almost 30% of British and Indian investors have more than half their wealth tied up in real estate while about 40% of the total respondents worth more than £30 million have a similar allocation, the survey shows.

Three out of four investors surveyed said residential property is looking attractive and two thirds are keen to explore investing in commercial real estate.

However a large number, some 75% said they feel hampered by borrowing costs.
The US was the most attractive real estate market for investors outside their home country, regarded as having the highest potential for return on investment.