Vietnam’s realty among top destinations for Singapore billionaires: wealth report

Vietnam is in the top 5 destinations for ultra-high net worth individuals (UHNWI) in Singapore seeking property investments abroad, Knight Frank said in its latest Wealth Report.

The fast-growing Southeast Asian nation is seen as one of the top value destinations for UHNWI in Singapore notably for the high value it offers, both in its cities and coastal and countryside destinations for property investments, said the real estate services company's report.

Ho Chi Minh City, Vietnam’s southern economic hub, ranks third for affordable luxury condominiums after Sao Paulo (Brazil) and Cape Town (South Africa). “It is proving such an attractive drawcard for investors from nearby regional countries,” the study said.

“Over 2022 we saw high levels of interest from overseas investors for the commercial markets in Vietnam, a noticeable proportion of which came from private capital, including the largest transaction Knight Frank brokered in the last 12 months,” said Knight Frank Vietnam managing director Alex Crane.

“We anticipate this trend will continue in 2023 but also envisage that local valuations will be under pressure from more pan-Asia competition as these private investors are also able to mobilize in similar emerging economies, or more mature economies where security and yield may look like a better bet than Vietnam,” he said.

According to the Wealth Report, 2022 was the second strongest year on record for commercial real estate investment volumes amongst private investors, capitalizing on repriced assets and favorable currency positions, with 32% of Asia-Pacific’s high-net-worth individuals reporting that they intend to increase investments in commercial property, surpassing the global average of 28%.

Private investors were the most active buyers in global commercial real estate investment in 2022, accounting for 41% of the total investment. Multifamily residential, or the private rented sector, was the investment of choice, followed by offices and industrial and logistics combined.

In Asia-Pacific, high-net-worth individuals’ allocation to commercial investment increased over 30% year-on-year last year, accounting for over $1.53 billion in commercial property investment - a significant uptick amidst a broader decline in investment volumes across the Asia-Pacific region, which decreased by 21.3% in 2022.

Neil Brookes, global head of capital markets at Knight Frank, commented: “The ongoing repricing of assets and the stronger currency positions have allowed private investors to continue their dominance in the market.

“With debt set to be a key factor for all investors in the year ahead, private clients are well-positioned to take advantage of opportunities as they are typically less reliant on debt with ample cash reserves to secure prime assets quickly.”

Despite the expected persistence of macroeconomic challenges in many global locations, Knight Frank's High-Net-Worth (HNW) Pulse Survey indicates that property holdings are likely to increase. And 19% of high-net-worth individuals (HNWIs) intend to invest directly in commercial property, with 13% set to take the indirect route. Healthcare-related assets topped the wish list for HNWIs in 2023 (35%).

While Asia-Pacific HNWIs responded similarly to their global peers in the aforementioned questions, they are more optimistic about commercial property investment than their global peers, according to the study.