Bottom Line: Track2Realty estimates that wealthy Indians would be attracted to London and Dubai properties in 2017. We explain the market dynamics behind it.
A survey by Track2Realty in 2014 among the NRIs, HNIs and other wealthy & influential investors found that their aspiration for a home outside India has always been Singapore, Malaysia, New York, Sydney, UK (London) and Middle East (Dubai).
On the eve of 2017, it seems nothing has changed yet, but the market realities are tilted towards wealthy Indians investing into London and Dubai properties in particular this year.
Though the ceiling on how much an Indian can invest abroad in a financial year remains same at $200,000, many of the other sought-after global cities are beyond the reach of aspiring Indians. This makes the case of Dubai and London not just preferred destinations to invest but also realistic.
With Dubai property prices quite attractive for the last few years, the drop in London property prices post the BREXIT makes London market equally attractive and realistic for the high-end investors.
Why Indians to invest in London & Dubai?
- Attractive property prices at this point of time
- Transparent market and friendly policies with India
- Property prices and RBI’s remittance limit of $200,000 in a fiscal year makes other aspiring cities unaffordable for Indians
- Demonetisation makes Dubai an ideal investment choice as Indians would like to recover loss with a tax-free property market
- London property prices post BREXIT seen as ‘Now or Never’ opportunity
PNC Menon, Chairman-Emeritus of Sobha Ltd, that has foothold in both these markets believe the Indians will be attracted to Dubai in particular due to impact of demonetization on real estate market. He expects a surge in Indian investments in Dubai property as a result of the recent shift. Now that the money is legal and cleansed, people are looking at various new avenues to recover some of their losses and ROI that is tax free is very attractive for obvious reasons.
“Dubai is now a very sought after destination to invest in tax-free property with solid returns for Investors and also for end users who are looking at a second home. For example, our flagship project, Sobha Hartland, is expected to provide the profit that end users and investor seek. In fact, a two bedroom apartment is estimated to yield more than 2.3 lakhs of tax-free rental income every month plus the annual advantage of 20-30% capital appreciation,” says Menon.
Parth Mehta, Managing Director, Paradigm Realty believes global investment sales will surely be seen skyrocketing in the year 2017 due to the interest of Indian investors and robust values in Dubai and London.
“A slower growth in real estate also is indirectly proportional to the economy however with a steady growth, real estate market will pervade every sphere of economic activity. With bilateral friendly policies, an influx of investments via FDI will eventually lead to increased positive business sentiments,” says Mehta.
Harjith. D. Bubber, M.D & CEO, Rivali Park maintains that investment in properties abroad offers a good investment and also good returns in rentals.
“These investments are made by HNIs who will continue to invest wherever they see a good opportunity as the markets abroad are transparent. These investments are normally made via the official amounts that the Indian Government allows individuals to remit USD 200,000 per annum or through the offshore companies that are set up for business and investment purposes,” says Bubber.
Hiral Sheth, Director – Marketing, Sheth Creators believes the real estate market has always attracted Indian investors, whether it be India, Dubai or London. The steadiness of Indian rupee in the economy and relaxed RBI norms by the government has further created a favourable climate for Indian residents to invest in international realty market, especially in Dubai & London. Also, in order to liberalize the foreign exchange facilities, the RBI has started a Liberalized Remittance Scheme, that allows Indian to hold properties in foreign countries.
“Countries like London and Dubai offer lucrative investment prospects along with multiple offers and options. Dubai tops the list due to its geographic proximity to India and the large Indian population residing in Dubai further drives the demand of Dubai’s real estate segment,” Sheth.
Vivek Mohanani, Jt. Managing Director, Ekta World says the commencement of globalisation, upsurge in foreign expenditure limit and equivalent valuations have surfaced the path for real estate investments in the foreign markets of UAE, USA and UK to name a few. Amongst these, Dubai and London are considered to be the red-hot destinations preferred for direct cross-border realty acquisitions by the global Indian real estate investor community.
“These locations top the list, thanks to their proximity to the Indian shores, a gamut of lifestyle benefactions, prosperous economy and non-taxable investments. Moreover, a safe investment modification, economic and political steadiness, potential for appreciation of assets are more reasons for investors in India to drift towards foreign markets. Depicting a positive performance and long-term growth, Dubai’s sweeping infrastructure growth, project developments and transparent processes and measures have attracted investors to explore these markets,” says Mohanani.
Contrary to the general feeling, Kaizad Hateria, Brand Custodian and Chief Customer Delight Officer, Rustomjee Group adds that property purchase is a major decision making process for Indians and factors like proximity, convenience, affordability, price appreciation and benefit for future generation are taken into consideration before the purchase.
“Total purchase of residential and commercial property in 2016 in the Indian real estate industry accounts to $160 billion; as against $22 billion in Dubai. Indians by nature like to invest in property that is closer to their routes and look at India as a safe haven for long term & stable appreciation. Also, since Dubai and London have been going through a rough weather, lot of investors are not happy with the returns they expected. This has brought their focus back into the Indian real estate market,” adds Hateria.
In a nutshell, global cities like Dubai and London are a popular destination for wealthy and HNI Indians, who opt to invest in residential properties abroad as their second homes. Having a property in these cities also fulfill the role of holiday homes. Education and business related interests are also key drivers behind buying property in foreign land. Market realities indicate more Indians investing in these two cities in 2017.
By: Ravi Sinha
