NRIs Target India, Indians Eye Abroad for Real Estate Investment

July 15, 2009
After long lull, there is flurry of activities in the realty sector. The large NRI community, especially Malyali and Punjabi, are on rampage. If the recent study of Assocham on the real estate scene in India is any indication, the large Malayali and Punjabi NRIs are buying the houses of their liking. It is a well-known fact that Malyalis and Punjabis have migrated in hordes over the years. Some of them are also buying commercial space. People from the land of five rivers have been migrating for almost one hundred years and the quiet Malyalis have also shown to the world that they are second to none when it comes to going abroad for greener pastures. Of course, that does not mean that NRIs from other states are not purchasing houses in either their home towns or other parts of the country.
Eminent scholar Dr. Chandrasekhar Tiwari of Delhi University, who has been studying Indian Diaspora from various angles, says that perhaps only those NRIs are buying properties in India who have migrated to other countries during the last 25 yeas or so. They are still very much close to their roots. ‘‘I am pretty sure that those who had shifted before 25 years or so are not buying properties. Only the first generation NRIs are coming back to India,’’ feels Dr. Tiwari. Meanwhile, it is learnt that Malyali NRIs prefer to buy some kind of property in their capital city Thiruvanathapuram, Trichur, Kottayam and other such big towns. Of course, there are many who have purchased houses in metros cities too. And if you talk about the macho Punabi NRIs, they do not mind buying houses even in Delhi, various NCR towns and also developed cities of their own state. Unlike Malyali NRIs, they buy commercial properties too.
DR. Devender Gupta,CMD of realty advisory Century 21 India, says that that more often than not NRIs buy flats in the range of Rs 60 lakhs to Rs 80 lakhs. They buy properties for purely investment purpose. There is hardly any emotional factor that is involved in. As and when they get good appreciation on their properties, they dispose it off. Meanwhile, with real estate prices at an all-time low across borders, buying property abroad is suddenly making sense to affluent Indians. “The property slump is not just confined to India. Prices have crashed considerably in the US, the UK and the Middle East and many Indians are seeing this as an opportunity to buy property there,” Rajesh Goenka, chairman of Axiom Estates, the London-headquartered provider of property services in India.
So much so, high net worth Indian investors are spoilt for choice: sea-facing villas in picturesque Mauritius, studio apartments and country cottages in Britain, condominiums in Singapore, and super-luxury homes in the Gulf. But of all foreign locales, Dubai is the most sought after, say brokers familiar with the latest fad. “Dubai is the hottest destination for celebrities and the rich on the hunt for a dream home. However, real estate prices were so steep allthese years that very few could afford property there. Now as the slowdown has hit the Dubai realty market also, rates are down by 30-50 percent,” Goenka said. “Buying property in Dubai attracts no government tax and even if you put your property on rent, the income is completely tax-free,” said Syed Mazaz, the Mumbai representative of Dubai-based real estate brokerage, Better Homes.
According to him, property prices in Dubai are comparable to those in Delhi or Mumbai - starting from as low as Rs.3 million ($62,000) for a studio apartment in the International City project in Dubai to Rs.15 million ($309,000) for a two-bedroom luxury apartment facing the sea. “Tell me, can you get a similar bargain in Delhi or Mumbai? I'’m getting many enquiries and about one-third of them end up buying a home in Dubai,” Mazaj said In Europe, Britain is the favourite destination for Indians planning property investment. “The UK has a huge NRI population and attracts a large number of Indian professionals. No wonder people are buying property there. We alone are receiving at least 100 queries for the UK every week, leave aside other consultants,” Goenka said. “However, in most European countries and the US, the preference is for studio apartments and two-bedroom sets,” he added.
One such interested buyer is Noida-based businessman Subham Agarwal. “Both my children are studying in the UK and I feel that they may ultimately settle down there. So taking a house there is not a bad option when property prices are at an all-time low,” Agarwal told JITO. Adding: “I am planning to buy a studio apartment for my children.” Countries such as Singapore, Mauritius, Thailand and Malayasia – where prices have dropped up to 30-40 percent in recent months - are also attracting Indian investors. In Thailand, a two-bedroom apartment costs around Rs.2.4 million ($49,000), and can go up to Rs.40 million ($824,000) for luxury apartments. In Singapore, this would be in the range of Rs.2.6 million-Rs.26 million ($54,000-536,000) for similar accommodation, while it will be between Rs.3 million ($62,000) and Rs.12 million ($247,000) for two-three bedroom apartments in Malaysia.
In Mauritius, super luxury villas are going for Rs.20-30 million ($412,000-618,000). Apparently, for India’s affluent circles, these are ’steal deals’ - getting a second property abroad at domestic rates. Explains Jaideep Singh, head of the India desk at global property consultant Knight Frank: “People are buying property abroad because these are as expensive or sometimes even cheaper than in India, which makes it perfect for getting a second, or a third home.”
Ref:http://www.indianrealtynews.com/nri/nris-target-india-indians-eye-abroad-for-real-estate-investment.html