Decoding International property in post covid times. Why Diversification is required?

Amidst the global pandemic and the uncertainty of the future, Indian investors are seeing an important opportunity to capitalize on earnings and diversify. As with any new investment strategy, we advise investors to go with a tried and tested solution in new markets and what better than real estate, which has time and again been a proven asset class to tide over a crisis.

Interestingly there has been a major focus on international real estate and it is seen as an avenue to consolidate wealth, diversify assets and earn a good yield. In the current scenario of a downturn in economies globally and the negative earning potential, real estate assets are plum picking in a majority of countries and hence getting increasingly popular with the UHNWIs.

Diversification in a timely manner allows investors to tap into a higher growth potential, expand their asset portfolio and embrace a global lifestyle. Market volatility and currency swings also make investing in real estate globally a much more viable and lucrative option.

Although investment into real estate has fluctuated over the years through various downturns, the overall trend has been for higher allocations to real estate, and there seems to be no reason for this trend to reverse. Real estate continues to offer good risk-adjusted returns that are less correlated to other asset classes.

Now more than ever this portfolio diversification advantage of real estate investments is emphasized as this is a period of increased volatility in the equities and commodities markets.

Finally, the spread between International real estate yields and other domestic investments yields like govt bonds, mutual funds, equities etc remains at levels that more sufficiently reward the real estate investor. Given this, it is expected that we will see continued flows (and potentially an increase) of capital into real estate over the medium to long term.

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