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A survey by Track2Realty in 2014, among NRIs, HNIs and other wealthy and influential investors, found that Singapore, Malaysia, New York, Sydney, UK (London) and the Middle East (Dubai), were the preferred destinations for owning a house outside India. Although the limit on how much an Indian can invest abroad in a financial year, remains the same at $200,000, many of the global cities are likely to remain beyond the reach of aspiring Indians, in 2017, except for Dubai and London.
While property prices in Dubai have remained attractive for the last few years, prices in London have also dropped following the Brexit vote, making it an attractive and realistic market for the high-end investors.
Why are Indians looking at Dubai and London?
PNC Menon, chairman-emeritus of Sobha Ltd, which has a presence in both these markets, believes that Indians will be attracted to Dubai, in particular. He expects a surge in Indian investments in Dubai’s property market, following the demonetisation in India. Now that the money is legal and cleansed, people are looking at various new avenues to recover some of their losses.
“Dubai is a sought-after destination, to invest in tax-free property with solid returns for investors and end-users, who are looking at a second home. A two-bedroom apartment is likely to yield more than Rs 2.3 lakhs of tax-free rental income every month, plus 20%-30% annual capital appreciation,” says Menon.
Parth Mehta, managing director of Paradigm Realty, predicts that global investments will skyrocket in 2017, due to the interest of Indian investors and the fundamentals of Dubai and London’s property markets. “With steady growth, the real estate market will pervade every sphere of economic activity. Moreover, friendly bilateral policies and an influx of FDI, will boost business sentiments,” says Mehta.
Factors that favour Indian investments in offshore realty
Harjith D Bubber, MD and CEO of Rivali Park, however, maintains that HNIs will continue to invest, wherever they see a good opportunity as the markets abroad are transparent. “These investments are generally made via the official amounts that the Indian government allows individuals to remit, or through the offshore companies that are set up for business and investment purposes,” he explains.
A stable Indian rupee, has also enabled Indian residents to invest in international real estate markets, points out Hiral Sheth, director – marketing, Sheth Creators. To liberalise foreign exchange facilities, the RBI has also started a Liberalised Remittance Scheme, which allows Indians to hold properties in foreign countries. “London and Dubai offer lucrative investment prospects, along with multiple offers and options. Dubai tops the list, owing to its geographic proximity to India and the presence of a large Indian population,” Sheth explains.
Vivek Mohanani, joint managing director of Ekta World, attributes the rise in Indian investments in overseas property markets, to globalisation, the increase in foreign expenditure limits and equivalent valuations. “Dubai and London are preferred, as they offer safe investment prospects, with economic and political stability and potential for appreciation. Dubai’s sweeping infrastructure growth, project developments and transparent processes, have also attracted investors,” says Mohanani.
Reasons why Indian investors may ignore global realty markets
Wealthy Indians, who opt to invest in a second home abroad, generally use such properties as holiday homes. Education and business-related interests are also key drivers, behind buying property in a foreign land. Kaizad Hateria, brand custodian and chief customer delight officer, Rustomjee Group, points out that factors like proximity, convenience, affordability, price appreciation and benefit for future generations, are taken into consideration before any property purchase. “The total purchase of residential and commercial property in 2016 in the Indian real estate industry, was close to $160 billion as against $22 billion in Dubai. Indians, by nature, like to invest in property that is closer to their routes and look at India as a safe haven for long-term and stable appreciation. Also, Dubai and London have been going through a rough patch and a lot of investors are not happy with the returns on investment. This has brought their focus back to the Indian real estate market,” concludes Hateria.
Why Indians prefer to invest in property in London and Dubai
- Attractive property prices at present.
- Transparent market and friendly policies with India.
- The RBI’s remittance limit of $200,000 in a fiscal year, makes properties in other global cities unaffordable for Indians.
- Demonetisation makes Dubai an ideal investment choice, as Indians may try to recover their losses in a tax-free property market.
- Prevalent property prices in London, post Brexit, provide an opportunity for investment.
(The writer is CEO, Track2Realty)