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Jul 21, 2013, 12.33 PM IST | Source: Moneycontrol.com

Here's how Indians are investing in properties abroad

Anuj Puri of Jones Lang LaSalle India explains the trend of Indians investing in real estate projects abroad. He talks about how India is becoming a challenging place to invest on the back of high loan interest rates and expensive metro living conditions.

Anuj Puri

Chairman & Country Head, JLL India

Expertise : Property

More about the Expert...

Anuj Puri
Jones Lang LaSalle India

The real estate market in many countries offers very lucrative investment prospects, with various offers and options. Apart from that, Indians buying property abroad can often avail of citizenship in the host country. This factor has considerable aspirational value with many.

Also read: Chennai real estate market growing steadily: Indiaproperty

The aspiration factor aside, property in more and more locations within Indian metros has become enormously expensive. Moreover, interest rates for bank loans are already proving to be a stumbling block and may rise further with the future revision of RBI norms. In comparison, an Indian wishing to buy a property in New York, London or Singapore can avail of the considerably lower interest rates of local banks in those countries.

Also, many foreign property markets are more transparent than our own, so investors can get 'clean' deals much faster and easier. Investment in property abroad makes sense for those who are employed or have business interests in the country of choice. Indians who have settled or are planning to settle abroad permanently are, of course, prime candidates.

Who Is Buying, And Where Are They Buying?

The broad profile of Indians who are looking at buying properties abroad would include business owners, professional property investors, mid-to-top level company management and high networth individuals. A very large component of buyers is also comprised of people whose children study in those countries.

Singapore, Malaysia, New York, Dubai and various cities in the UK predominantly London - are the preferred destinations for Indian property buyers. Because of the current ceiling on how much an Indian can invest abroad in a financial year, central city locations are out of reach for a large number of aspiring Indian buyers.

This makes peripheral locations, which tend to be cheaper, attractive to such buyers. The US or the UK are doubtlessly closest to the hearts of most Indians hoping to buy property abroad. However, when these are out of reach, Dubai is definitely among the most preferred among realistic property investment destinations for Indians.

The current limit on Indians for investing abroad continues to be USD 200,000 per annum. This ceiling is not for investment in real estate alone, but applies to any kind of investment in a foreign country. The limit applies to individual buyers, so the investable amount doubles in the case of couples. The Indian Government may consider relaxing the ceiling further if it perceives increased interest by Indians in investing in foreign properties.

Indians often have the option of entering into joint ventures with local operators in foreign countries such as Mauritius, Bhutan and Sri Lanka. The UAE also offers such a facility in some quarters. Entering into a JV with a foreign entity on its home turf can lead to vastly increased investment scope (beyond the USD 200,000 ceiling now prescribed by the RBI) and generate higher profitability.

Precautions For Investing In Property Abroad

Indians buying property in a foreign country should remember that there are investment and liability risks they may be exposed to. In some countries, land laws for investment in immovable properties can lack transparency and be quite complicated. It is inadvisable to invest in any kind of project announced by a company or other seller that has no physical representation on Indian soil. The exception would be where one has personally established the legal and market bona fides of the seller.

Secondly, one must keep in mind that most foreign property markets have their individual regulatory and permission mechanisms. While the RBI does permit investment of up to USD 200,000 per annum, one must establish whether one is eligible to invest in the country of choice to begin with.

Apart from the above, the general guidelines for any property investment also apply:

• Ensure that the actual location of choice has sufficient appreciation potential

• Establish the suitability of the neighbourhood (even more important in a country whose social dynamics one is unfamiliar with

• Ensure that the property is free of litigation and has a clear title.

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Mumbai
Capital Values Rate/Sq ft (INR)
Aajiwali
3000 - 5000
Ambernath
3000 - 5000
Badlapur
1000 - 3000
Bhandup (West)
11000 - 13000
Chembur (East)
15000 - 17000
Chembur (West)
11000 - 14000
Dombivali (East)
4000 - 6000
Ghatkopar
13000 - 15000
Heeranandani Gardens Estate - Powai
25000 - 30000
Hiranandani Gardens Estate - Powai
25000 - 30000
Kalyan (East)
2000 - 4000
Kalyan( West)
3000 - 5000
Karjat
1000 - 3000
Khandala
8000 - 10000
Kharegaon
5000 - 7000
King Circle
17000 - 28000
LBS Marg
12000 - 15000
Lonavala
3000 - 5000
Mulund (East)
11000 - 14000
Mulund (West)
11000 - 14000
Mumbai Nasik Highway
3000 - 6000
Powai
15000 - 17000
Senapati Bhagath Singh Road
3000 - 5000
Sion (East)
18000 - 21000
Sion (West)
17000 - 22000
Tilak Nagar
12000 - 22000
Ulhasnagar
3000 - 5000
Vikhroli
11000 - 14000
4 Bunglows
17000 - 28000
7 Bunglows
13000 - 23000
Chandivali
10000 - 15000
Malad (East)
12000 - 14000
Versova
21000 - 24000
Airoli
4000 - 8000
Belapur
6000 - 9000
Ghansoli
6000 - 8000
Kalamboli
4000 - 9000
Kamothe
4000 - 6000
Nerul
7000 - 10000
Palm Beach Road
12000 - 15000
Panvel
3000 - 6000
Sanpada
8000 - 10000
Sea Woods
8000 - 10000
Ulwe
3000 - 6000
Uran
3000 - 6000
Vashi
9000 - 12000
Altamount Road
62000 - 72000
Breach Candy
62000 - 74000
Chowpathy
48000 - 58000
Colaba
42000 - 46000
Cuffe Parade
67000 - 69000
Dadar(East)
32000 - 34000
Dadar(West)
29000 - 32000
Lower Parel
32000 - 34000
Mahalaxmi
38000 - 40000
Malabar Hills
68000 - 75000
Mumbai Central
23000 - 34000
Napean Sea Road
66000 - 74000
Parel
26000 - 34000
Prabhadevi
37000 - 39000
Tardeo
41000 - 49000
Worli
36000 - 41000
Andheri (West)
18000 - 20000
Andheri(East)
15000 - 17000
Bevarly Park
5000 - 7000
Bhayander (East)
5000 - 6000
Bhayander (West)
3000 - 5000
Boisar
1000 - 3000
Borivali (East)
11000 - 13000
Borivali (West)
10000 - 14000
Dahisar
4000 - 8000
Goregaon (East)
13000 - 17000
Goregaon (West)
12000 - 14000
Kandivali (East)
12000 - 14000
Kandiwali (West)
11000 - 12000
Malad(West)
9000 - 14000
Mira Road
5000 - 7000
Naigaon
1000 - 4000
Nala Sopara (Eastt)
3000 - 5000
Nalasopara (West)
3000 - 5000
Poonam Nagar
6000 - 8000
Shanti Nagar
7000 - 9000
Shrishti
6000 - 9000
Vasai Road
1200 - 4000
Virar
1000 - 3000
Note: Price trend are based on asking rate and not necessarily on the transaction date
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