Overseas luxury real estate: Here's why it is catching the eyes of HNIs

Economic Times

5 hours ago

Getty Images Whether it's luxury penthouses in New York or heritage homes in London, high networth Indians are investing overseas.
For India's affluent class, luxury real estate is more than a status symbol— it's an investment strategy that blends capital appreciation, lifestyle enhancement, and portfolio diversification. Increasingly, this strategy is looking beyond India's borders.
The surge is evident. According to the India Luxury Residential Outlook Survey 2025 by India Sotheby's International Realty, interest in overseas real estate has more than doubled, rising from 10-11% to 22%. For HNIs and UHNIs, global property investments are no longer just aspirational, they are tactical.
Whether it's luxury penthouses in New York or heritage homes in London, high networth Indians are investing overseas. Over the years, Indian billionaires like Lakshmi Mittal, Adar Poonawalla and Ravi Ruia have continued to invest in luxury properties in Dubai, London and New York. With global mobility on the rise, investors are confidently staking their claim in the world's most desirable postcodes.Let's explore why international real estate is catching the eye of India's wealthy, where they are investing, and what savvy investors must watch out for.Reliable capital appreciation: Established global hubs like London, New York and Dubai have long demonstrated robust long-term price appreciation. In 2024, Dubai's prime residential prices rose by 6.8%, with forecasts predicting a further 15-20% rise in 2025, driven by policy reforms, foreign investor incentives, and infrastructure development under the Dubai 2040 Urban Master Plan.
These cities attract talent, capital and corporates, all of which contribute to housing demand. For investors, it's a steady compounding story with international liquidity.Currency hedge: Investing in dollar- or pound-denominated assets creates a natural hedge for Indian investors. During periods of rupee depreciation or domestic inflation, the value of these global assets often holds or appreciates, enhancing the wealth preservation function of the asset class.Rental income: Luxury real estate in top-tier markets is a magnet for premium tenants—executives, diplomats and international students. In central London, for example, rental yields typically range from 3.5% to 4.5%. New York's Manhattan mirrors this, offering dependable rental income from a well-established tenant base.This steady yield stream enhances the investment's overall return, making it both income- and asset appreciation-driven.
Price-to-value comparison: Investing in global real estate today represents a strategic value-driven decision. Consider two prime examples. In Central London, a one-bedroom luxury apartment is currently priced around £850,000, reflecting the city's prestige, stability, and sustained international appeal. Meanwhile, across the Atlantic in New York's prestigious Upper East Side, a comparable one-bedroom condominium is available at approximately $750,000 Factor in better build quality, global amenities, and strong rental yields, and the math starts to make sense. Simply put, Indian investors are weighing not just square footage, but lifestyle, legacy, and long-term value.
Lifestyle, education, legacy value: For many, the draw is also emotional and aspirational. A home in Central London or Manhattan offers global mobility, lifestyle cachet, and proximity to elite education institutions. In 2024 alone, over 1,40,000 Indian students received UK study visas—a 35% rise—creating demand for family-oriented housing in areas like Kensington and Ealing. These homes often become multi-generational legacy assets as well, passed down not just for their monetary worth, but for their symbolic global footprint too. Complex regulatory landscape: Each country has its own tax labyrinth. In the US, non-resident investors are subject to federal and state levies, including FIRPTA (Foreign Investment in Real Property Tax Act), which withholds tax on sale proceeds. The UK can impose up to 15% Stamp Duty Land Tax (SDLT) for foreign buyers. Further complexities arise with capital gains, rental income taxation, and estate duties.
RBI's LRS cap: India's Liberalised Remittance Scheme (LRS) limits individuals to remitting $250,000 per financial year. Families can pool limits (up to $1 million), but luxury real estate in prime London or New York markets often exceeds this. Compounding the issue is a six-month usage clause, limiting investment flexibility.
Legal and local knowledge gaps: Investing abroad isn't just about picking the right city. Buyers must assess title clarity, zoning regulations, developer credibility, and local market dynamics. A lack of due diligence can result in costly mistakes.
High maintenance and management costs: Luxury homes demand luxury upkeep. From service charges, building maintenance and tenant management, these hidden costs can dent yields and add to the logistical burden.
Changing rules and policies: Markets evolve. New York's rent regulation changes have impacted rental margins. Dubai's shifting visa norms and property ownership reforms could evolve. Global property ownership requires agility and a long-term view. Overseas luxury real estate presents Indian HNIs with a compelling blend of returns, lifestyle, and strategic diversification. But this is a high-involvement play. It demands due diligence, regulatory awareness, and trusted local partnerships. Done right, a home abroad can be more than a financial asset. It becomes a gateway to global living, future-proofing one's wealth, and passing on a legacy with international roots.
The Author is DIRECTOR, INTERNATIONAL, INDIA SOTHEBY'S INTERNATIONAL REALTY