Investment, particularly the choice of where to place your funds, is in the spotlight now more than than ever.
As the economic outlook for the year ahead continues to be uncertain and with interest rates remaining low, investors are more than ever on the hunt for yield.
With this in mind, we recently commissioned leading research firm YouGov to investigate investment trends in Hong Kong.
In a survey of 6,000 adults across five major global markets, we found that Hong Kong has proportionally more investors in a range of assets than any other market, with 77 percent of the population invested in at least one asset class.
This compares with just 30 percent in the UK and 64 percent in Singapore, Hong Kong’s main regional rival.
But in spite of this strong investment market, overseas property is a relatively unpopular asset in Hong Kong.
Of the representative sample of 1,033 Hong Kong adults we polled, 67 percent invest in stocks, shares and bonds, but just 7 percent invest in foreign property.
For foreign exchange products, the figure is 25 percent and for commodities it is 9 percent.
Even in this bear market for commodities, they remain a more popular asset class than overseas property.
Hong Kong is behind the curve globally. In the United Arab Emirates, 13 percent invest in overseas property while in Singapore, 8 percent do.
Our research shows that potential investors in Hong Kong are mainly held back from investing in property abroad by their lack of understanding of overseas laws (45 percent) and the market (44 percent) in overseas territories.
However, we also found that 38 percent see currency fluctuations as a major disincentive, perhaps unsurprisingly in the present market environment.
One thing is clear: although many Hong Kong citizens are experienced investors, there is still a lot of room for overseas property to expand its popularity as an asset class, especially as we enter a period of volatility across global markets.
What’s more, potential investors are held back chiefly by a lack of knowledge, which tallies with our experience educating investors on where the best opportunities are.
When the respondents were asked where they would consider investing, they picked Japan, with 26 percent saying they would consider investing there.
Meanwhile 17 percent would look to Australia and 15 percent would consider the UK, both established safe havens.
These results did not come as a surprise to us.
Japan, Australia and the UK are all robust, heavily regulated, highly transparent markets where real estate prices have historically increased over the medium to long term.
Their attractiveness should increase as the US dollar continues to strengthen.
These would be good places to look as Hong Kong investors turn in ever greater numbers to overseas property investment.
We believe that in the coming months, ongoing market volatility, a desire to diversify beyond Hong Kong where the domestic market is flat and greater comparative value elsewhere will push more and more people to think for the first time about buying property abroad.
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