By Himanshu Kohli
The recently published Dubai Real Estate Market
This interest is not limited to expats already working in Dubai but also extends to UHNIs worldwide who are eager to tap into this thriving real estate market.
The reasons for this surge in interest are manifold: factors such as capital appreciation, high rental yields compared to India
This recent trend of Indians lapping up real estate globally is a part of the plan B option of HNIs and UHNIs. The emerging class of affluent families in India wants to live in a free, globalized, interconnected world without geographical boundaries.
As these UHNIs follow the culture of working from anywhere, they are keen to acquire expensive properties outside India in countries like Dubai and London, allowing them to fulfill their personal and professional aspirations while spending more time outside the country.
In addition to this, as a part of generational planning, these families wish to attain alternative residency/citizenship through investment. The aim in such cases is to give their children the best opportunities in higher education, better job prospects and quality of life
International diversification
International diversification comes with the added advantages of geographical and currency diversification and helps mitigate the overall portfolio’s risk. When investing in real estate, investors should also consider options like REITs and InvITs, along with funds that invest in different geographies and have access to various domains like commercial, residential, land parcels, warehouses, etc.
Once an investor has decided on the share of allocation towards global real estate, they have to look at factors like the region’s demand and supply needs, the potential for returns, and the direction of interest rates, as falling interest rates will positively impact real estate over time. It is also essential to know the exit cost, impact cost, and taxation laws, as these become critical factors when leasing out the properties or exiting from the same in the future.
While investing in international real estate, investors should see if their wealth management team has local partnerships in different markets. A tie-up with a local partner can help investors from various perspectives, such as advisory, execution, monitoring, and reselling, in the future.
This is because after buying the property, there is much hand-holding required for maintaining the property, and at the time of resale, factors like the exit cost, impact cost, and taxation laws become essential.
In addition, if it is a commercial property, the local teams would have a fair understanding of how to lease out the place of business. In short, the local partner will do all the financial and legal due diligence required for acquiring, maintaining, and reselling the property.
To conclude, investment in real estate abroad is a good option, especially for clients looking for a backup plan, Plan B, which can be converted into Plan A whenever they want. The USA, Portugal, Canada, and the UK are the most popular countries for HNIs/UHNIs looking at alternative residency/citizenship.
Hence, investors looking to acquire international properties should go through a wealth advisor who, with their astute advice and expertise in the local markets, can help simplify and fasten the investment process, which will, in turn, help investors achieve their global mobility goals.
(Author is Co-founder, Client Associates)
