Market turmoil, political unrest driving super-rich to invest in overseas realty

In a telling revelation on the dipping fortunes of the realty industry, a new study conducted by Wealth-X and the Sotheby's International Realty, has revealed that a growing number of Ultra High Net Worth (UHNW) individuals (defined as those with at least US$30 million – approx INR  200 crore in assets), in the BRICS group of nations - Brazil, Russia, India, China & South Africa - are opting to own luxury property in countries other than their own owing to rising concerns over issues like market fluctuations, political unrest and business-related concerns in their home country.

As per the report approx 12 percent of second homes purchased by emerging market UHNW individuals (those who reside in BRICS nations) are located outside their country of residence, with the number likely to rise substantially in the coming years.

It further adds that recent stock market fluctuations in these nations are leading a new generation of UHNW investors who are more in favour of investing the more stable luxury residential real estate in developed Western markets.

The report notes that UHNW individuals from Brazil, Russia, India, and South Africa are keenly pursuing opportunities for stable residential real estate investment growth in major urban hubs abroad, with their investment decisions guided by a similar set of concerns - market fluctuations, business considerations, and political upheaval.

The report points to two key trends which are responsible for fueling the rise in the number of ultra wealthy individuals who are buying luxury homes abroad, driven by the safety attached to such investment destinations and as part of their plans to gain residency or citizenship in such countries.

Globally, there has been an uptrend as the UHNW Residential Real Estate index, tracked by Wealth-X, rose to 115.2 in the second quarter of 2015, registering a rise of 8.3 percent over last year.

The continued rise in the index reflects the confidence of UHNW individuals to invest in luxury residential real estate, the report concludes.