But the boom that created more than $30 trillion in value in developed countries between 2000 and 2005, according to an estimate last summer by The Economist, is showing signs of age, especially in the U.S. Those who believe the end of a speculative run up is in sight point to the current lull in sales of high-end properties and real estate agents’ growing inventories. But others believe that the market remains healthy, noting that the number of new housing starts continues to climb and properties priced under $1 million still sell quickly.

The sentiment of private investors toward real estate remains strong. However, while aggregate figures are difficult to find, private bankers and real estate investment specialists say that many wealthy families are looking to diversify their real estate portfolios by including overseas assets, both as a way to obtain exposure to fast-growing markets and as a hedge against the possibility of a downturn in the U.S. They are seeking out new real estate investment trust (REIT) markets, private equity—style real estate funds and syndicated, bespoke property investments.

"A lot of American investors are looking to disproportionately up-weight ex-America real estate, and that’s really gathered momentum over the past year," notes Peter Hobbs, London-based global head of real estate and infrastructure research with Deutsche Bank. The questions of how and where to invest depend on the individual’s liquidity preferences, return expectations and risk tolerance.

TOP VIEW:  Concerns about the U.S. housing market have prompted many wealthy investors to consider diversifying their real estate portfolios by including exposures to fast-growing countries overseas. Both developed and emerging economies have established regulatory frameworks to support real estate investment trusts, one of the most liquid vehicles for taking exposure to property markets. But those with longer investment time horizons may want to take a more direct approach, investing directly in syndicated property acquisitions or through private equity funds that specialize in overseas real estate.

The principle factor that distinguishes among the various options for investing in overseas property is liquidity. At the very illiquid end of the spectrum are private equity vehicles specializing in real estate. "That’s the least liquid form of investment because you have no control at all over the management or sale of your asset," says Willie Gething, London-based global head of real estate at HSBC Private Bank.

Syndications of private properties by private banks are also extremely illiquid. In these transactions, a bank arranges and underwrites the purchase of one or more buildings, and then syndicates the exposure among its clients, while typically charging underwriting and arranging fees. Investor demand for these types of deals–which leverage the bank’s expertise in the overseas property market–is growing strongly, Gething says, adding, "These are less liquid than buying your own building because you can only sell when the syndicate wants to sell it."

Buying your own commercial or residential property is clearly more liquid, although only for those with market-specific expertise, time to invest and a healthy appetite for risk. Further on toward the more-liquid end of the spectrum are unlisted funds, which may offer the opportunity to exit on a quarterly basis, and REITs, which can be traded every day, Gething notes.