By Ruma Dubey
In 2015, RBI relaxed some norms for withdrawals while travelling abroad. As per the new rule, RBI doubled the annual overseas investment ceiling. This means Indian families can take up to $250,000 of money per family member, amounting to $1 million per year for a family of four. And we are seeing the effect of this now in the global property market. Previously, the figure was just $100,000 per family member or $400,000 per year based on family of four. And you know who has been the biggest beneficiary of this tinkering? Dubai, Singapore, Sri Lanka, Malaysia, Cyprus, UK, Australia and there is data to prove this!
The latest data from Cluttons released last month shows that between August 2016 and July 2017, Indian buyers now account for 22% of the total sales in central London, up from 5% in 2012. And out of this buying, half is by people wanting to occupy the same home and for the other 50%, it was like a second home or an investment. That is the kind of surplus money we are talking about! In UK, Indian’s remain the second largest property buyers after Russians.
Thus today, despite the Indian realty market supposedly being in a slump, buying properties abroad has become more lucrative for Indians. Knight Frank jointly with International Real Estate Expo (IREX), published a report, ‘Looking Beyond Borders.’ And the report stated that investments by Indians abroad rose almost (hold your breath!) by a staggering 59 times from $1.9 million in 2005-06 to $111.9 million in 2016-17!
Apart from RBI relaxing the norms, the truth is that buying properties in India is no longer any value-for-money. You can buy a studio apartment in a good location in Dubai for Rs.1.5 crore and get an annual rent of anywhere around 7-8 lakh. Can we imagine such kind of returns in India? Mumbai property costs are much higher than anywhere in the world, when compared to what we actually get for the money. In Dubai, Indians bought property worth Rs 42,000 crore between Jan’16 to June’17, making them the top foreign property investors, along with Chinese and Pakistani nationals.
This, plus the fact that abroad, buying property process itself is very easy and for all that we might say about having climbed up the “Ease of Doing Business” ladder, the fact is that things still remain pretty tedious. Also there are other major issues - delays in development, lack of exit options and high ticket sizes.
This it would be no exaggeration to say that Indians are becoming global when it comes to spreading their money. Once again, this is because we do not have any incentivized schemes and realty sector itself is mired in its set of problems. Indians have the money but the value within the country is going down everyday. With valuations skyrocketing, one really wonders what is the quality of life that we are living today in India.