Follow The Smart Money

High Net Worth Investors Move Cash Into Property, reports Wealth Bulletin

Rod Thomas If you follow investment trends, a common model is to watch what assets the super rich are buying and do what they do. The logic is simple. They have the very best paid advisors who make money if their client does well, and get fired if they do badly. You can ride on their coat-tails, without paying for the very expensive advice!

On 6^th April Wealth Bulletin reported that the desire for tangible assets is growing and real estate firms are cleaning up. Europe's high net worth individuals - those with over $1m in liquid assets - are filling their portfolios with property.

Property Makes Up Half Of the Investment Portfolio!

A survey of Citi Private Bank's clients last week showed property now makes up half of the investment portfolio of the average European HNWI (high net worth individual), and nearly three-quarters plan to increase this allocation.

This is an astonishingly high percentage of their total investment portfolio. Consider that most IFA's in the UK advise their average clients to hold maybe 10% of their portfolio in property, the remaining 90% in shares, gilts and corporate bonds.

Forgive us for being cynical, but at Axis our view is that this investment advice is driven by two important factors - neither in favour of the investor!

1. Most IFA's know next to nothing about property and don't have investments themselves.
2. Most IFA's get rich by selling the shares, gilts and corporate bonds they recommend and they don't have a mechanism for making money for recommending property

Hmmm! Food for thought.

Knight Frank Handles More Property Than Credit Suisse Does Financial Assets!

There's more. Last year, global real estate adviser Knight Frank handled nearly $900bn worth of commercial, agricultural and residential real estate, advising clients ranging from individual owners and buyers to developers, investors and corporate tenants.

By comparison, Swiss private banking giant Credit Suisse was responsible for $752bn of assets under management as of December 31st, 2009, $33bn of which was net new money. Europe's largest wealth manager, UBS, has around $1.5 trillion under management, but has been haemorrhaging clients - suffering outflows of around $200bn last year and the year before.

Wealth Bulletin also reported from inside La Salle, one of the largest property managers in Europe.

Simon Morrison, head of the pan-European property business had this to say; "Up until the middle of last year, the capital just wasn't there," - but now he expects €1bn of equity from new clients into pan-European separate accounts over the next six months, along with €400m to €500m to come in from UK investors over the next three months, of which about a third would be from existing investors.

The figures come as asset managers, particularly in the UK, have reported taking in hundreds of millions of pounds worth of assets, as investors fight to take advantage of attractive yields.

So the question is simple. When there is so much evidence of HNWI's pouring money into property shouldn't you be doing the same? At least if you want to be wealthy and financially independent in the coming years.

What Next

Time for action. Call Axis on 01273 447 300 and talk to a Portfolio Manager. We'll help you assess your strategy to deliver exactly the mix of growth, income and risk that fits your investment profile.

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Rod sig