Amid a weak outlook, real estate is one of the few asset classes that still retains value, writes Samuel Chu
he year 2015 marked a turning point in asset allocation globally, with fixed income marking its worst losses in years, equities remaining volatile with limited upside and hedge funds wiping out their two-year gains in just the first two months of 2016. The outlook isn’t looking particularly rosy either, amid potential rate hikes, volatilities in currency and a slowdown in the global economy. As a result, many investors are now seeking flight to safety rather than high returns.
So the million-dollar question is: where should we put our money now? I believe real estate is one of the few asset classes left that is still able to retain value. However, it isn’t simply about location, location, location. While markets with good supply-and-demand fundamentals serve as a basis for investment strategy, quality is what makes your property stand out from the crowd. Despite uncertainties in the global economy and financial markets in the past years, many trophy assets around the world were bought by sovereign wealth funds and state-owned enterprises seeking core returns.
Meanwhile, London, New York and Hong Kong continue to set record-breaking residential prices. At Phoenix, we continue to see good value in well-located residential properties with premium design. In recent years, we have been active in this area, from Gramercy on Caine Road to The Morgan on Conduit Road. Hong Kong’s residential buyers are sophisticated and experienced—and have discerning eyes. Genuine high-quality properties should always maintain their value in a diversified portfolio.