The lackluster performance of major markets and the depressing outlook in the Eurozone and North America have made high net worth individuals (HNWIs) and their families rethink their investment strategies and priorities.
To counter the dip in traditional investment performance, those managing assets for HNWIs have looked to diversify their assets. As a result, there is renewed investment interest and activity in the Eurozone and Asia Pacific. New investment opportunities are also opening up in several countries in South America.
At the same time, the Eurozone is showing signs of recovery. The monetary and fiscal reforms instituted by several sovereign states, plus the infusion of funds from European Central Bank, have started to pay off.
Recently, there has been an increased infusion of funds into real estate in the UK and other EU countries. UK investment platform Cofunds reported that net inflows into the Investment Management Association haveincreased by more than 400 percent in the past year.
A Forbes report by Panos Mourdoukoutas noted, “Eurozone Initial Public Offerings (IPOs) and credit marketsare coming back to life. Last week, two Spanish REITs attracted strong investment interest, as they made their debut as publicly traded funds.”
The Asia-Pacific region has also drawn the attention of the world’s wealthiest. An Asia Asset Management report states that, “Asia-Pacific’s wealthiest investors are moving much more of their money into direct investment opportunities and away from capital markets as they see greater opportunities in other businesses and real estate rather than equity and bond markets. In this respect, family offices in the region are following trends in Europe, where concern over some financial products has led many of them to embrace direct investing in a more concerted manner in the last few years.”
There are many opportunities for direct investment in the Asia-Pacific Region outside of real estate. It is home to more than 70 percent of the world’s population. Except for Malaysia, Singapore and Thailand, the majority of countries in Asia are still underdeveloped, particularly in the infrastructure sector.
To meet the demands of their large populations, the energy sector will likely top these developing countries’ agenda over the next five to ten years, including exploration of alternative and renewable energy resources like solar, driven by rising fuel costs.
Another growth region is South America. Like their counterparts in Asia, most countries in South America are also developing. While many investors avoided South American markets because of problems with political stability, recent reforms have made the region an interesting new landscape for foreign investors, with Brazil leading the pack.
Overseas Property Mall have listed Brazil, Chile, Nicaragua, Peru and Uruguay among South American countries with strong investment potentials.
Also of interest is the fact that Brazil will host the Summer Olympics in 2016, generating a range of investment opportunities that are likely to cascade onto other neighboring countries mentioned in Overseas Property Mall’s list.
Many analysts on Wall Street are bearish on the future of traditional US market products. But global wealth managers can see growing opportunities in the UK and South America that can help balance the downturn in other sectors.
Note: This article was first published in the first issue of Family Offices Today.
This article appeared at thesoholoft.com on November 9, 2015.
David Drake is the Chairman of LDJ Capital, a multi-family office; Victoria Partners, a 300 family office network; LDJ Real Estate Group and Drake Hospitality Group; and The Soho Loft Media Group with divisions Victoria Global Communications,Times Impact Publications, and The Soho Loft Conferences. Reach him directly at David@LDJCapital.com.