I hate calling property market tops. But this time, it really seems to be it.
[…] ”follow the smart money”. By this I mean that you should study what businessmen and investors with long, successful track records are doing with their money. And possibly invest alongside of them. Unlike most investors who feel they have to chase returns to get rich, these people are already wealthy and can pick and choose which asset classes to invest in. Given this freedom, they are often attracted to assets which offer value relative to other assets. It pays to know what these people are buying and selling.
Which brings me to an important development in Asia this year. It’s become clear that many real estate investors in Hong Kong and Singapore are cashing out of property. These investors are among Asia’s wealthiest and they’re starting to exit their favourite asset. If this implies that property in Hong Kong and Singapore is close to peaking, as I suspect it does, then it has negative implications for the economies and stock markets of both cities. On a longer time horizon though, a re-balancing away from property as the primary driver of wealth generation could well prove beneficial.
I’ve been hearing a lot of anecdotes about insiders selling out of real estate, especially in Hong Kong. So an article in The Wall Street Journal this week entitled “Big players cash out of Hong Kong property” naturally caught my eye.