An Abode Abroad

Indians are fast emerging as big-ticket investors in residential properties overseas. Thanks to relaxed RBI norms, you can now have a home in Dubai, Malaysia, Singapore and London.

PICTURE SPEAK

TOP OF THE LINE: The £11-million Hanover House in Wentworth, UK, and The Palm, Dubai (below)

Many an eyebrow may have been raised at Bhatia’s decision a couple of years ago but not anymore. Like him, a growing number of Indians are looking overseas to make property investments. And though Dubai tops the list of destinations, cities like London, Singapore, New York and even parts of Australia and Canada are major attractions.

When UK real estate agent Savills held an exhibition of London-based properties in Mumbai this April, the by-invitation-only affair drew over 100 people. In what was a pleasant surprise, they received calls from an additional 20 buyers later. “These enquiries were not from those who attended the exhibition,” clarifies Sheetell Halai, head of Savills’s India desk, “Many of the callers told us they had wanted to purchase property in London but just didn’t know whom to contact.”

A sizeable chunk of the buyers comprises professionals, aged between 30 and 60 years. Savills’s customers are mainly high net worth individuals—CEOs of blue chip companies, investment bankers, doctors, pharmaceutical specialists and Bollywood stars. Similarly, the Dubai-based Better Homes, which came to Mumbai in December last year, has already sold 100 properties in Dubai to Indian residents, 10 per cent of whom are salaried professionals consisting of lawyers, chartered accountants, architects and media executives. “We are surprised at the number of requests we receive for the purchase of properties in Dubai,” says Raja Kaushal, the company’s managing director for India.

PICTURE SPEAK

SECOND HOME: My Habitat in Singapore is popular with Indians

This focus on the Indian customer has prompted many foreign real estate agents to set up full-fledged offices in the country. Apart from Savills and Better Homes, others with a regional presence include Damac Properties and Nakheel from Dubai, L.J. Hooker from Australia, and Knight Frank and MoneyWise Group from the UK. Hamptons from the UK is also scouting around for a place. Sebastian Siddiqui, national sales manager for India and Pakistan, Hamptons, confirms that he is shortlisting a site for his office. “Given the demand for property by Indians travelling abroad, we decided that the time is right to create our own presence here,” he explains.

PICTURE SPEAK

PICTURE PERFECT: A villa in Malaysia, part of the MM2H scheme

According to a report by The Knowledge Company (Technopak), India has a growing number of people in the affluent and middle classes, with the top-end doubling every year. In the last two-three years, there has been a consumption overdrive, particularly in overseas travel. The report estimates that there are about 1.6 million Indian families earning over Rs 45 lakh a year, allowing for a huge surplus of cash to be spent on ‘conspicuous’ consumption. The number of such homes is said to be growing by 14 per cent. With increased remittance limits, a family of four earning individuals can easily remit $400,000 (Rs 1.6 crore) per year. “I have even seen friends invest in property together,” says Piyoosh Gupta, solicitor and partner at DSK Legal.

The purchasing power of Indians is also being facilitated by the convenient home finance schemes that are being offered by banks and other financial institutions. In some cases, loans are given up to 95-100 per cent of the price of the property. In places like Dubai, all-cash deals are easy and individuals can directly purchase property (in Government-approved areas) from private builders. The loan tenures are long and can go up to 25 years.

Not surprisingly, Indians topped the list of property buyers, second only to the British, in Dubai last year, according to the Dubai Land Department. After liberalisation of immigration and real estate ownership laws, Dubai has become the most preferred destination for investors and tourists, who want to keep second homes there. One can purchase a one-bedroom apartment for Dh59,000 (Rs 6.6 lakh) and a studio apartment for Dh42,000 (Rs 4.6 lakh) in International City, while an upmarket villa would cost around Dh11,50,000 (Rs 1.3 crore) at New Dubai. Like Malaysia, Dubai too offers a residence permit, although only 20-25 per cent of the individuals who buy actually want to settle there.

INVESTORS’ GUIDE

Resident Indian individuals are free to acquire and hold immovable property outside India without prior approval of the RBI. A foreign currency account needs to be opened in the country where the property is located and up to $100,000 (per person, per year) can be remitted to the seller. Investments can be made through Indian Banks like ICICI, SBI with offshore branches or through foreign banks. The remittance facility under the scheme is not available for payments made directly or indirectly to countries like Bhutan, Nepal, Mauritius, Pakistan, Indonesia, Myanmar, Nigeria and Philippines.

Similarly, in Singapore, the value of residential property rose by 10 per cent last year. London too saw property rates going through the roof. According to Hamptons, the city saw a 43 per cent increase in demand for property in prime areas, while availability decreased by 21 per cent. In fact, both the volume of inquiries from buyers as well as overall average price hikes in 2006 grew the fastest in the last six years. Prices of stand-alone houses in Greater London rose by 233 per cent from an average £192,386 (Rs 1.5 crore) in 1996 to £640,499 (Rs 5 crore) in 2006.

The Malaysia property outlook, however, was mixed on account of a hike in interest rates as well as stricter consumer financing criteria. Still, with the government promoting its MM2H scheme, which allows foreigners to purchase residential property in Malaysia at a minimum of RM150,000 (Rs 18 lakh) each, the demand in the high-end sector is bullish.

Yet, none of the buyers are willing to come on record. It’s not just the big-ticket buyers who prefer anonymity, even those who acquire smaller properties keep a low profile. Brokers say this is because of the high tax liability. According to them, only a tenth of the actual dealings ever get reported. Yet, as the economy prospers, Indians have got richer, adding a whole new layer of consumers. India has been an important consumer for property seekers abroad and this figure will only rise.

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