Diversifying outside your own country: what actually changes
The concentration almost nobody sees
When people think about risk they almost always look at the financial portfolio. But for most households the portfolio is the small part: the bulk of the wealth is the home, and the income comes from a job or a business that also sits in the same country.
The result is that home, income and savings all depend on one country and one currency. It is not a deliberate choice, it is everyone's starting point, and for exactly that reason it never gets counted as concentration. If the economy you live in slows, the value of your home, rental demand and the security of your income often slow together.
Anyone who thinks in portfolio terms understands this problem well when it concerns a single stock. Far less when it concerns an entire country.
What property abroad actually does, and what it does not
It does one thing in particular: it adds an asset driven by different demand, a different cycle and often a different currency. If you buy where the population is growing and the labour market draws people in, rental demand has engines that are not your own.
It does not do two other things, and it is better to say so now. It does not reduce risk if it becomes the largest item in your wealth: at that point you have simply changed which country you are concentrated in. And it is not a liquidity instrument: if you may need the money back quickly, property is not where that portion belongs.
Income property, and the drawbacks people rarely mention
People with capital often do not buy equities: they buy a shop let to a tenant, a commercial unit, an already-rented apartment. It is an understandable choice, because it is an asset you can see and it pays a contracted rent.
The drawbacks are real though, and worth naming, because knowing them makes you a better buyer. The first is concentration on a single tenant: if the shop empties, the yield does not fall, it goes to zero until the next contract. The second is liquidity: a commercial unit on a secondary street can sit unsold for years. The third is that the value depends on the rent, so a tenant renegotiating downward also lowers the sale price of the building.
These are the same three risks everywhere, but their weight varies enormously by market. In a deep market, where hundreds of sales are registered daily and rental demand is fed by a growing population, both the time to replace a tenant and the time to resell get shorter. This is not an argument about yield: it is an argument about risk, and on income property that is what actually matters.
The question about the percentage, and why I do not answer it
"How much of my wealth in property" is among the most frequent searches on this subject, and the honest answer is that no single percentage fits everyone. It depends on income, horizon, family commitments, tolerance for swings and what you already own: the same inputs a licensed financial adviser weighs, and which I have no standing to assess.
Be wary of anyone who gives you a number knowing nothing about you: that is selling, not advising. What I can tell you precisely is the other half of the question, namely what you actually get once that decision is made: what it takes to enter a specific market, what it yields today, how liquid it is when you want out. For Dubai those numbers come from the public transaction registry, not from estimates.
Equities or property: they do different things
The comparison is usually framed as if one wins. Neither does: they are instruments with different properties, and the choice depends on which of those properties you need. This compares characteristics, not returns, which depend far too much on the period chosen to be honest in a single line.
| Equities and funds | Property | |
|---|---|---|
| Liquidity | Sold within a day | Weeks or months, and the price is negotiated |
| Minimum amount | A few hundred euros will do | The entry ticket of the chosen market |
| Management | None, or delegated to the manager | Tenants, maintenance, recurring costs |
| Income | Variable dividends, decided by the issuer | Contracted rent, less the vacant periods |
| Use of leverage | Costly and inadvisable for a private investor | A mortgage is routine |
| What moves it | Earnings, rates, global sentiment | Local housing demand, population, infrastructure |
| Price transparency | Continuous public quotation | Depends on the market: in Dubai the registry is public, elsewhere it is not |
Worth keeping in mind
Where geographic diversification does not help
- If the property abroad becomes the dominant item in your wealth, the concentration has not gone: it has moved, into a country you know less well than your own.
- Markets are not as independent as they look. In a global crisis almost everything falls together, and geographic diversification helps far more against local cycles than against worldwide shocks.
- Buying far away adds risks you do not have at home: rules you do not know, a different language in the contracts, and the difficulty of checking things in person. They belong in the calculation alongside the advantages.
- Tax depends on where you are tax resident, not on where the property sits, and belongs with an accountant working across both countries. It should be looked at before buying, not after.
Frequently asked questions
What share of my wealth should be in property?
No percentage is right for everyone, and anyone giving you one without knowing your situation is selling. The share depends on income, horizon, commitments and how much property you already own: if you own your home, a significant part of your wealth is already in bricks. This is an assessment to make with a licensed financial adviser.
Is it better to invest in equities or in property?
They do different things and are not alternatives to each other. Equities are liquid, can be bought in small amounts and need no management; property is slow to sell, has a high entry ticket and needs managing, but pays contracted rent and allows the use of a mortgage. The useful question is not which returns more, but which of those properties you need.
Does property abroad really diversify?
It diversifies if it adds an exposure you do not have: different local demand, a different economic cycle, often a different currency. It does not diversify if it becomes the largest item in your wealth, because at that point you have simply changed which country you are concentrated in. And in a global crisis markets fall together anyway: geographic diversification protects against local cycles far more than against worldwide shocks.
Where do you start, in practice?
With the question that comes before all the others: what that capital has to do. If it must produce income now you need liquid markets with a mature management industry; if it must grow over time the reasoning changes; if you might need it back quickly, property is not the instrument. Only then does choosing a country, and then an area, make sense.
This page explains what property abroad does within a portfolio, not how to allocate a portfolio. It is neither financial advice nor an investment recommendation: allocation should be discussed with a licensed adviser and tax matters with an accountant working across both countries.
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From the principle to choosing the country
If the reasoning holds for you, the next step is working out which market answers what you need, and what it takes to get in.