Real estate investments today, are not restricted by national boundaries. Taking note of the opportunities in the Indian real estate market, many foreign investors and developers have shown interest in investing here. At the same time, many Indian developers and investors are exploring opportunities abroad, to diversify their investment portfolios.
According to a Knight Frank-IREX (International Real Estate Expo) report, Indians’ spends on overseas homes, has increased manifolds. The key points of the report are:
- Buying international homes has become cheaper today, vis-à-vis 2016.
- Residential properties in four out of the five most-preferred international markets, earned positive returns over five years.
- Almost one out of four resident Indians prefer to spend more than USD 1 million, for a house overseas.
- 63 per cent Indian buyers picked compact apartments of less than 1,500 sq ft as the most preferred property size.
- Children’s education and use of the property as a second home, are the primary reasons why resident Indians buy a property in the UK.
- More than two-thirds of resident Indians prefer apartments, followed by villas, for overseas homes.
Vimal Anand, director of IREX, maintains that while the Indian real estate market may not seem very attractive at present, its long-term prospects remain promising. In an exclusive interview with Housing News, Vimal Anand shares his views on overseas investments by Indians, as well as foreign developers’ interest in the Indian market.
Q: Are foreign real estate companies eager to invest in India and are Indian companies also looking to explore opportunities in overseas markets?
A: International developers started investing in the Indian market a few years back. Some of them tied up with Indian developers – for example Emaar of Dubai tied up with MGF. However, now with the Indian real estate market not doing that well, they have deferred investing in India in the short-term. On the other hand, Indian real estate companies are exploring opportunities overseas. Tata Housing is building in Sri Lanka, Shapoorji Pallonji in Dubai and Lodha and Indiabulls have launched a couple of projects in London. In the coming year, I expect this trend to grow and more Indian real estate companies will develop projects overseas.
Q: How prepared are foreign companies and where, in the Indian market, are they looking to invest?
A: Foreign real estate companies will stay away from the Indian market in the short-term and they will wait for the Indian real estate sector to stabilise, after this phase of oversupply and price correction. With the implementation of the Real Estate (Regulation and Development) Act (RERA), greater compliances and stabilising of the market, these companies should start investing again.
Q: What are the opportunities for Indian realty investors, in foreign markets? Do you think rental income is attractive, in the overseas markets?
A: There are numerous opportunities, for Indian investors in international real estate. They can invest for capital growth and good rental returns. Investments in Australia, Dubai and UK, have appreciated from 20 per cent to 50 per cent, over the last five years. The rental returns are 5-6 per cent, as compared to two per cent in India. On top of it, some of the countries also offer residency and citizenship.
Q: Which are the most attractive destinations for Indian realty investors, who want to explore investment opportunities abroad?
A: UK, UAE and Australia, have always been the favourite destinations and these markets have given good returns to the investors.
Q: What are the key challenges and opportunities, for real estate investors in overseas dealings?
A: International markets are extremely regulated and there is very little risk of default or delayed projects. However, the resident Indian investor has to be careful about foreign exchange fluctuations, high maintenance costs in case the property is not rented out and tax implications in case the property is rented out or sold. The opportunities are healthy capital growth, good rental returns and residency/citizenship, in case of investments in a few countries.