As equity markets get routed worldwide, there is a flight to real estate.
Markets are crashing all over. It started with the Greece turmoil, China market taking a rout and then the US market taking a breather. So the question in most investors’ mind is: “Where to park funds in these turbulent times in order to have peace of mind rather than having sleepless nights?” The answer is: Real estate which is emerging as the new global currency.
The unthinkable had just happened – the people of Greece had voted to tell the big European banks and their political lapdogs to go pound sand. This proves the axiom by John Paul Getty: “If you owe the bank USD100, that’s your problem. If you owe the bank USD100 million, that’s the bank’s problem.”
Latest from Bloomberg:
China’s Shanghai Composite Index plunged amid concern a raft of measures to stabilise equities is failing to stop the bear-market rout as traders unwind margin bets at a record pace. The Shanghai Composite tumbled as much as 8.2 per cent, the most since 2007, before paring losses to 4.8 per cent to trade at 3,549.92 at 9:56 am local time. There were four gainers among the 1,106 stocks that trade on the benchmark gauge, which has slumped 28 per cent since the June peak. PetroChina Co., the biggest stock, tumbled 4.9 per cent as nine out of 10 industry gauges dropped at least 4 per cent in the CSI 300 Index.
Plunging Chinese equities have damaged the confidence of its main driving force — the more than 90 million individual investors who make up about 80 per cent of the market, according to a survey of households.
The recent events in Europe, China and the Middle East clearly demonstrate that clients are now pulling their funds out of the equity market which is turning into an asset bubble and can collapse any time. There is strong correlation between equity bubbles and upsurge in real estate globally. This is the best opportunity for savvy investors to take a long position in real estate for their wealth preservation. Real estate has become the new safe haven for smart investors globally.
So, people in Greece, Italy, France and Spain are getting their funds out of the banks and buying properties in Kuala Lumpur, London, Dubai, Melbourne, Istanbul and New York. Rich Chinese, European and American investors are investing in trophy investment assets in residential and commercial properties.
The growing wealth in Asia provides plenty of opportunities for the clients to have their wealth protected as markets get more edgy and uncertain.
Shan Saeed is Chief Economist and Investment Strategist at IQI Group Holdings, a property and investment company operating and advising clients in Kuala Lumpur, Singapore, Hong Kong, London, Melbourne and Dubai.