Investing in Property: Beyond Your Primary Residence

For most people, buying a home is a milestone. For capital founders, it’s just the beginning.

Real estate has long played a starring role in private wealth. According to Knight Frank’s latest Wealth Report, 81% of ultra-high-net-worth individuals (UHNWIs) own their primary residence. But more interestingly, 30% of them also invest actively in additional properties, including commercial, residential, and even tokenised real estate.

Why? Because real estate isn’t just an asset—it’s a system. It generates income, protects against inflation, and offers powerful tax tools. Done right, it scales with global ambitions.

Let’s unpack what a sophisticated real estate strategy looks like in 2025 and years to follow.

Why Real Estate Remains Core for the Wealthy

Inflation Protection That Works

Real estate is a real asset—its value is tied to tangible land, bricks, and mortar. That makes it one of the most effective long-term hedges against inflation. As prices rise, so do rents and replacement costs.

Reliable Income Across Cycles

Residential and commercial properties generate steady, contractual income. Multifamily housing, logistics centres, and medical offices, in particular, have shown remarkable stability through economic turbulence.

Tax Efficiency

Real estate shines in after-tax returns. Some key benefits:

• Depreciation reduces taxable income without affecting cash flow.
• 1031 exchanges allow U.S. investors to defer capital gains tax by rolling proceeds into another property.
• Interest deductibility and local tax incentives boost return on equity in many jurisdictions.

Whether it’s personal use, investment, or estate planning, real estate is a tax strategist’s best friend.

Commercial vs. Residential: Where to Focus

The Commercial Surge: 20% of UHNWIs Targeting Deals

There has been a noticeable shift toward commercial real estate (CRE), with 20% of UHNW investors planning to increase CRE exposure in 2025. Top sectors include:

• Logistics: Warehouses and fulfilment centres (especially in Europe and the U.S.).
• Healthcare: Clinics, assisted living, and medical office buildings.
• Office (selectively): Premium, ESG-compliant, and flexible-use spaces.

Residential Still Wins in Tight Markets

Despite higher rates and regulatory noise, prime residential markets—like London, Singapore, Dubai, and Miami—remain structurally undersupplied. Investors are focusing on:

• Build-to-rent opportunities
• Short-term rentals in tourism hubs
• Multifamily assets in stable, growing cities

Geographic Diversification

Owning real estate across countries can reduce concentration risk and offer unique market dynamics. Many HNWIs now hold property in three or more jurisdictions, blending:

• Lifestyle properties (e.g., vacation villas)
• Yield-focused assets (e.g., urban rentals)
• Strategic markets (e.g., near schools or transport hubs)

Structuring Your Real Estate Portfolio

Direct Ownership vs. REITs vs. Funds

Many investors blend the three. For example, holding physical residential property locally while accessing commercial real estate globally via funds or REITs.

Syndications and Club Deals

For larger opportunities, HNWIs often invest as part of syndicates, pooled structures that allow multiple investors to buy into larger assets together. These are increasingly common in:

• Mid-market commercial assets
• Development projects
• Niche sectors (e.g., data centres or cold storage)

Tokenised Real Estate: The Next Frontier

Digital innovation is making real estate even more accessible. Tokenised real estate platforms utilise blockchain to fractionalise ownership, enabling investors to buy shares in properties with far lower minimums.

• 65% of HNWIs express interest in tokenised property, according to a 2024 Deloitte survey.
• Benefits include faster settlement, secondary liquidity, and global reach.

Example: A fractional interest in a €10M Paris commercial property, managed via a digital platform and held through a Swiss SPV.

Building an International Property Portfolio

Jurisdiction Matters

Different countries mean different:

• Tax regimes
• Ownership rules (e.g., leasehold vs. freehold)
• Foreign buyer restrictions

Key markets to watch:

• UK: Strong legal system, high stamp duty, attractive rental yields in select cities
• Switzerland: Highly stable, but limited availability and foreign ownership controls
• UAE & Singapore: Open markets, expat-friendly, favourable tax environments

Currency Hedging

When investing globally, currency exposure can either enhance or erode your returns. Hedging tools include:

• Forward contracts
• Dual-currency mortgages
• Multi-currency property funds

Estate Planning and Tax Structuring

Cross-border portfolios introduce complexity. Consider:

• International trusts
• Holding companies (e.g., BVI, Guernsey, Luxembourg)
• Dual-tax treaties

A global tax advisor is essential if you plan to build across borders.

Advanced Optimisation Strategies

Smart Use of Leverage

Debt amplifies returns—but only when used prudently. HNWIs typically target LTVs of 50–65%, balancing risk and flexibility. Internationally, interest-only loans and asset-backed lending structures are common.

Tax Deferral with 1031 Exchanges (U.S. Specific)

Sell an income property in Los Angeles, roll the gains into a Miami multifamily complex, and defer the tax bill. 1031 exchanges are a powerful tool, although they come with strict rules and timing requirements.

Property Management at Scale

Managing five properties? Easy. Managing fifteen across four countries? That’s a business.

Sophisticated investors use:

• Professional management firms with cross-border capabilities
• Digital platforms for rent collection, reporting, and maintenance
• Family office integration, where property is tracked alongside liquid investments

Final Thoughts: Real Estate is a Strategy, Not a Transaction

Capital Founders don’t just own real estate—they orchestrate it. They treat property like a portfolio: designed, diversified, tax-optimised, and scalable.

Whether it’s through direct ownership, private real estate funds, or tokenised platforms, the common thread is intentionality. Every property plays a role—whether it’s generating cash flow, hedging inflation, funding lifestyle, or transferring wealth.

Is your real estate working for you, or just sitting there?