€350bn spent on global property

MORE than €350 billion was invested in property globally last year, an unprecedented amount.

Irish investors whose net worth has mushroomed in recent years economy and property market accounted for €5bn of that.

The bulk of their focus was outside Ireland with over €4bn put into commercial investments.

This year the growing band of high net worth individuals have been told to put their money into continental markets such as France and Belgium. That’s the view of Bank of Ireland Private Banking’s Global Property Outlook.

The bank has up to 1bn of private clients money invested in property, mainly in Europe but also in Britain and Ireland.

The growth of wealth in Ireland is driving the markets and the bank reckons the numbers of individuals in Ireland worth over €20 million has risen to 1,500.

Up to 10,000 more families and individuals who have net worths ranging between €5m and €20m want to enhance their wealth and at the same time protect their investments.

To do that the private banking arm of the banks says individuals should put between 20% to 30% in property and roughly 40% in equities with the rest in bonds and cash funds.

Up to 10% returns can be achieved in property markets provided the right investments are chosen, said Mr Collins.

Belgium and France deliver what they regard as pretty safe investment criteria based on a number of factors.

Low borrowing rates and the absence of currency risks favours Europe at the minute. Ireland is a tight market, with less flexibility for investors to get in and out.

In Britain, the bank believes prices are a bit high at the minute and not a good risk given the other factors involved such as higher interest rates. Investing in those markets requires more caution, the bank said.

Brussels continues to provide an unusual level of stability due to the scale of EU demand and low vacancy rates.

Paris continues to offer a modest premium over London. Bank of Ireland says that with lower funding costs and an absence of current risk, Paris offers Irish investors a natural market.

French regional cities also present significant opportunities.

Peter Collins, director of Bank of Ireland Private Banking noted Paris was the second largest office market in the world after New York which saw €12bn invested last year.

It helps also that the Paris region accounts for 30% of French GDP, he said.

Elsewhere in Europe the Nordic countries provide stability and transparency and is a region of significant potential.

Those who want to look farther afield might consider the Far Eastern markets including Singapore and Hong Kong, said Mr Collins.

Pat O’Sullivan, senior economist at the bank, said the interest rate scenario was benign with rates rising by no more than 2% over the next few years.

To get your foot in the door at the bank’s prestigious new office in Dublin’s Mespil Road, requires a net worth of €1 billion.