 |
 |
 |
| Peninsular Heights (top) Highrises in Dubai and overlooking London’s Westminster Bridge |
When it comes to giving his children the best education, the Delhi-based CEO of a leading company will stop at nothing. Not even forking out a few million pounds to buy a house near London for the comfort of his UK university-bound children. Soham Sinha did just that, pooling his employee stock options, fixed deposits and other resources.
After his son graduated from a Detroit university and obtained an H1 visa (which allows property purchase), Mumbai-based exporter Nitin Shah bought a two-bedroom condo lease for the equivalent of Rs 80 lakh in Michigan. “I know the returns in India are higher but this is a good second home buy for me,” says Shah.
Within a year of their posting to Dubai, newly-wed professionals Shoma and Arjun Sengupta are buying a flat in Dubai by pooling resources with their parents who live in Jaipur and Delhi. “The rentals are high here. And this is a good investment for our retired parents,” says Shoma.
Ravi George, a retired Indian head of a multinational company in Bangalore, has bought property in Singapore in the only zone that is open to foreigners not residing there.
A second address overseas no longer appears to be the sole purview of billionaires and film stars. More and more Indians are now looking at buying a home abroad. And sometimes, as Bangalore-based Atul Gupta discovered, the property can be relatively affordable.
Driving through the tourist town of Kota Kinabalu in Malaysia during a conference last year, the 50-year-old IT professional fell in love with a gated house with a ‘For Sale’ sign. The posted price worked out to Rs 38 lakh. Today, Gupta rues not having closed a deal. “We would have loved a place abroad where the cost of living and taxes are lower. Malaysia looked very attractive,” says Gupta.
Others apparently agree. Over 500 resident Indians have registered for the Malaysia My Second Home scheme launched by the Kuala Lumpur government last year which invites foreigners to buy property there. (Retd) Col Shashi Kumar, TRAC Representations (India), which scrutinises applications for the Malaysian government, says buyers are being sought through trade fairs, seminars and direct marketing initiatives.
savills, the top-end UK property consultants, will be sending invitations for a presentation at Hotel Hilton in Mumbai later this month. On offer: lifestyle properties for sale to the drivers of a revved-up Indian economy. The growing number of millionaires and the rising middle market in India “have a capacity to invest large amounts of money,” says Sheetell Halai, head of Savills’ 10-week-old India Desk, from London.
This month will also see the high profile Dubai Shows Ltd debuting in India with mainstay Worldwide Property Show in Delhi’s Pragati Maidan. Sellers from Dubai, Bahrain, Oman, Qatar, the UK, Canada, the US, Thailand, Hong Kong, Australia and New Zealand will be participating.
from countries as far apart as Australia, Mauritius, Dubai and Malaysia, schemes are afoot to attract rupees in the guise of dollars, euros or dirhams. In recent times, Dubai has allowed freehold property purchase by foreigners, entitling them to full ownership and resale rights. Mauritius allows property owners work permits and Malaysia gives a 10-year visa without working rights but allows a silent partnership with firms. Singapore has a property free zone for foreigners. “Sri Lanka, Bhutan and Mauritius have liberalised policies pertaining to Indians wishing to invest in properties there,” says Anuj Puri of Trammell Crow Meghraj Property Consultants.
A factor that has led affluent Indians to at least consider buying property overseas is the Indian government’s step in December to double the foreign remittance limit to $50,000 per financial year. The amount can be spent abroad without seeking approval. If pooled with a spouse or other partners, one could theoretically have a starting kitty of approximately Rs 40 lakh, enough to make a 10 per cent down payment on a pricey overseas property in, say, the UK or Australia. Or own a house that costs between Rs 18 lakh and Rs 40 lakh in Malaysia.
A townhouse in mumbai or Bangalore is already retailing for Rs 4 crore-plus, the same as new properties that are available in Wembley City which have a starting price of £454,000. Or one could get a studio at about half that price in Strata, a 43-storey residential tower, a regeneration project in Elephant & Castle, off London.
“It’s not a significant trend yet but definitely a market is opening up,” says Harvesp Mehta, national director, investments, at the global property consultancy firm Knight Frank. “Newly wealthy Indians are beginning to spread their assets abroad.”
Among Halai’s four freshly signed up clients are a Bollywood actress, who wants an apartment in London, and a Delhi-based professional manager. “If people knew we existed, the level of enquiries would be in double figures,” says Halai.
According to Anshuman Magazine, CEO, property consultants CB Richard Ellis, with Indian real estate currently giving excess returns there is enough opportunity for going out. “Besides, the amount of $50,000 is not large for property shopping. Investing in property overseas is no longer the domain of the ultra rich. The rich are also coming in. But it’s a trickle right now,” he remarks.
Property agent UK land Investment Real Estate International (UKLIREI) was advertising previously agricultural land in Kent at £13,200 (about Rs 11 lakh) a pinch for freehold plots of 250 sq. m. Title deeds of agricultural land, however, have to be carefully investigated, property consultants advised an interested buyer from India. “The middle classes in India, though affluent now, are still unable to invest abroad because of one major problem: lack of white money,” says UKLIREI’s director Kamal Rana.
Property consultants caution about management issues in owning property overseas. “Indians intending to invest in property abroad must be aware of certain investment and liability risks they expose themselves to,” comments Puri. Ownership does not necessarily mean visa or work rights.
But some present day buyers are already taking the plunge. Halai reveals that resident Indians usually want property “smack bang” in London. There are exceptions, however. For instance, a resident of Chennai wanted a property in Windsor, where the regent has a weekend home. “He could then say he had the Queen as a neighbour,” she recalls.
(Names of all buyers have been changed on request.)