Global property management: Challenges and solutions for high-net-worth owners

Reportedly the biggest store of global wealth – estimated at close to USD 380 trillion – ‘property’ remains a hugely popular investment for high-net-worth individuals around the world.

Offering a tangible asset with the potential for consistent returns, and appreciating in value over time, the appeal of maintaining a property portfolio continues to attract high-net-worth individuals and families. In fact, according to the 2024 Wealth Report, 70% of respondents already possess multiple properties, with an additional 23% expressing a desire to expand their holdings.

For wealthy individuals who live abroad, overseeing their properties can become a daunting challenge, fraught with concerns about damage, maintenance, and unforeseen risks.

Challenges

One of the biggest concerns for affluent property owners is the potential for damage to their investments. From luxurious estates to high-rise condominiums, every property is vulnerable to various threats, ranging from natural disasters to human error. According to the Wealth Report, a staggering 71% of respondents cited damage during renovations as their top concern, highlighting the inherent risks associated with property upkeep and enhancement.

This concern was followed closely by exposure to extreme weather due to climate change. Aside from physical damage to property, it is estimated that annual returns on real estate investments could reduce by up to 40% by 2030 due to the impacts of climate change , highlighting the validity of property owners’ concerns and emphasising the importance of proactive measures to mitigate risks and safeguard investments.

For owners living thousands of miles away from their properties, the administrative burdens and logistical challenges of owning this type of asset are amplified, adding an extra layer of complexity to the already demanding task of property management.

Moreover, financial obligations associated with property ownership can be particularly burdensome for individuals living abroad. Property taxes, insurance premiums, mortgage payments, and other recurring expenses demand meticulous attention to detail and timely payments to avoid penalties or legal complications. Failure to stay abreast of these financial responsibilities can have detrimental consequences for property owners, regardless of their wealth or status.

Tenant management poses another significant challenge for wealthy property owners residing abroad. Whether leasing out residential apartments or commercial spaces, dealing with tenants requires constant attention and effective communication. From rent collection to addressing maintenance requests and resolving disputes, absentee landlords must rely on trusted intermediaries to uphold their responsibilities and maintain positive tenant relationships.

Solutions

Considering these challenges, wealthy property owners must adopt strategic approaches to managing their global real estate portfolios effectively.

From conducting regular inspections and communicating regularly with tenants and agents, to obtaining adequate insurance, keeping comprehensive records, and implementing security measures, there are a multitude of steps owners can take to help mitigate the risk of property damage or loss.

Additionally, staying informed about local regulations, market trends, and emerging risks is essential for making informed decisions and safeguarding long-term investments.

For high-net-worth property owners living abroad, these measures to mitigate risk pose challenges, not only practically, but also due to the significant time burden required.

For some, a workable solution is to enlist a private client service provider, engaging reliable trustees and advisors to shoulder the administrative burden of, and ultimate responsibility for, property management and maintenance.

Swiss Trustees are a particularly attractive option for wealthy individuals and families as they can choose the governing law of their trust from any relevant trust jurisdiction.

Trustees and safeguarding property

Trustees have a fiduciary duty to manage and look after assets for their clients in a responsible and trustworthy manner. This includes the establishment and administration of appropriate structures to protect a broad spectrum of assets, including residential, commercial, and developmental properties.

Working in partnership with clients and their diverse property portfolios, trustees will utilise a global network of specialist intermediaries to navigate the complexities of multi-jurisdictional property management.

It is essential that a trustee has expert contacts across a wide spectrum of professional fields, including lawyers, tax advisors, letting agents and property developers. These connections ensure access to specialised expertise and resources as needed.

From managing lease agreements and rental payments, to understanding the fiscal framework around the purchase of a large property asset,, trustees may undertake both granular and ‘big picture’ tasks relating to property ownership, ultimately saving their client time, and reducing stress.

It is important for trustees to understand the experience and expertise of their clients, and their wishes. For example, a client who has accumulated wealth through construction and property development may express a wish to be more involved in this area of property management than a client who perhaps views property as a holiday home.

When a client engages a trustee, they transfer legal ownership of their property – and all other assets – that are held within the trust.

Transferring ownership of property to a trustee also safeguards the asset(s) from legal claims – for example in the case of financial difficulties or family disputes – and ensures seamless succession planning. There are also significant tax planning benefits to holding property within appropriate wealth structures.

Finding the right fit

Relinquishing ownership of property – or any other asset – can be a daunting prospect. It is essential for individuals and families to find advisors and intermediaries that they trust.

While each client will have different requirements on partners for their wealth journey, key considerations for selecting service providers may include:

• Longevity: Is the firm well established?
• Stability: Is the firm independent, or has it gone through multiple changes/acquisitions?
• Experience: Can the firm evidence direct experience of property portfolios?
• Ownership: Is the firm independent and able to make autonomous decision? If bank-owned/private equity, is there a potential for conflicts of interest with long-generational goals?
• Fees: Have you been provided with all costs upfront, or could you be subjected to hidden extras?
• Reputation: Do other professionals or peers have a positive view of the firm?

Ultimately, the challenges and risks of property ownership and management from abroad can be overcome or mitigated by appointing experienced service providers to dedicate the necessary time and resources. By entrusting the property to experienced professionals, owners can enjoy peace of mind knowing that their investment is in capable hands, even when located overseas.

This article was first published in TL4 Private Client Magazine Issue 15.