Wild volatility in the stock market once again has investors turning to real estate as a safe haven.
We’ve seen the phenomenon before. When the bottom drops out of the market, investors turn to property as a relatively stable environment with the prospect of steady income during what might be tumultuous times in equities.
“In times of turmoil, the world’s wealth turns to long-term property investment,” Becky Fatemi, director of British property agency Rokstone, recently told the Wall Street Journal. She told the paper that she’s already seen an uptick in interest from high-net-worth clients with “very real fears that this global crisis could push the world’s economy into recession.”
Many U.S. stock portfolios are down more than 30 percent in the wake of the coronavirus and bond markets have collapsed, pushing investors to rethink their strategies.
A recent survey of private bankers and wealth advisers by Knight Frank, the consultancy, found that four in five high-net-worth individuals planned to change their investment focus in the year ahead in response to the recent turn of events. More than 40 percent planned to increase their allocation to real estate, Knight Frank found.
“The world’s wealthy are actively responding to risk in a manner in which we’ve not seen since the global financial crisis,” Liam Bailey, Knight Frank’s head of global research, told the Journal.
Roofstock, a company that facilitates investment in real estate, says foreign investment has surged since the start of the crisis, including a 500 percent increase from Asia.
“I think it may be people looking to invest capital into what may be perceived as more stable areas that don’t have as much of an effect, at least not yet, from the virus,” CEO Gary Beasley told CNBC. (See “Investors turn to real estate as a safe haven” below.)
Certain markets will always attract buyers in a downturn, experts say. Factors such as strong transportation connections, a growing economy, strong infrastructure, and a stable government–all available in Panama–play key roles in the strength of a safe haven.