Luxury Properties: Indian Buyers Top Global Trends

Are Indian property buyers really going global?
Well, if the latest global property trends are to be believed, the answer to that question is a most emphatic YES. Sample this. Your desi brethren, of the super-rich NRI variety (naturally) are now the richest landlords in the premium Mayfair area in London, UK’s most exclusive, not to mention costliest business district.

Leaving the Russians (13 percent), the erstwhile numero uno landlords, far behind, Indians now account for approximately 25 percent of big ticket realty purchases, with property investments in central London alone, estimated to be in the region of a whopping USD 1.5 bn. in the last 18 months.

Endorsing the trend, data from UK’s land registry reveals that Indian buyers were the second-highest property buyers in central London for the same period, accounting for more than one in four property purchases.

The report adds that wealthy Indian investors bought 221 prime residential properties across central London, with a preference for exclusive locations like Mayfair, Belgravia and St John’s Wood.

According to Wetherell, the reputed Mayfair-based realty agency, an estimated 3,000 nouveau rich Indian families descend on Mayfair every summer, to get away from the scorching heat of their native India, staying at their London properties, luxury hotels or simply renting a place for the period of their stay.

The UK is just one among a growing list of countries like the US, UAE, Italy, Singapore, Switzerland, Malaysia and Mauritius that are now increasingly finding favour with well-heeled Indian investors looking to invest in overseas property.

In sun-soaked Italy for example, Lionard Luxury Realty, a leading real estate consultancy based out of Florence, sells at an average two to three properties to Indian buyers every year.

This is in addition to about 25-30 inquiries they get from potential Indian buyers scouting for property options every month. The preference is for sprawling villa properties along the pristine Tuscany coast that comes with a vineyard and some history attached.

With the more sought after villas dating back to the 15th or 16th century, usually in need of urgent repairs, buyers often need to seek government permission, prior to making any changes or repair to the property.  Typically buyers of Indian origin prefer to refurbish the interiors, while leaving the outdoor areas like the courtyard, garden, orchards and pathways untouched.
  
Closer home, Dubai (UAE) with its better quality of life, state-of-the-art infrastructure facilities, premium realty options to choose from and more importantly a huge Indian diaspora already residing there is a preferred destination among Indian buyers investing in real estate.  

A fact borne out by a January 2015 report by the Dubai Land Department that rates Indians as the top investors in Dubai’s real estate market, with investments to the tune of AED 18.12bn (approx INR 3,035 cr) in 2014.

Experts point to the impressive returns on property investment (approx 20-30 percent), its huge Indian population and close proximity to India, wherein a buyer can fly in, see the property and fly back, all within a matter of hours, is what makes Dubai realty such an attractive investment option for well-heeled Indians.

The city’s rising fortunes as a realty destination can also be gauged from the fact that Dubai witnessed approx AED 109bn worth of investments into property in 2014, inspite of the doubling of the property transfer fee to 4 percent (of the property value), as compared to AED 114bn in 2013 when the fee was just 2 percent.

With average ticket prices ranging from AED 2-4 million (approx INR 3.35-6.70 cr), NRIs have shown a marked preference for investing in popular locations like Business Bay, Dubai Marina, Burj Downtown, Emirates Hills and Jumeirah.


Sobha Hartland (MBR City), Akoya Oxygen (Dubailand), Orchid Akoya (Motor City area), Oceanscape (Al Reem Island), Golf Promenade Akoya (Emirates road) and Azizi Liatris/Orchid/Yasamine/Feirouz by Azizi Developments at Al Furjan, are some of the key upcoming residential and mixed-use projects by leading developers’ that are presently available to Indian investors with different budgets looking for a potential property investment in Dubai.

REALTY CHECK
The present limit for Indians investing abroad in real estate or elsewhere is capped at US$ 2.5 lakh per person, per annum. Therefore an average Indian family of four will have access to approx US$10 lakh of their own funds for the purpose of investment abroad.

As with every investment, buying property abroad also comes with its share of checks and balances. For example many countries restrict foreigners from owning property, while others like Singapore allow foreigners to buy apartments and condominiums, but not land, which requires special government clearance. On the flip side, Thailand permits foreigners to hold onto land, but only on a valid lease.

In a bid to stimulate foreign investments, many countries including the UAE, Cyprus, Portugal, Ireland, Malaysia and the Bahamas are also known to bundle high-value property purchases beyond a certain value with the added lure of a residency permit for the buyer and his family.

Then there are others like Singapore, which has no such scheme in place, but is still very popular with Indian investors simply because its sultry climate is similar to back home, and the city offers a far superior quality of life.
 
It is also advisable to check up on the foreign investment regulations and tax implications of both the home country and the destination country, to avoid vexed issues like double taxation. For example, India has tax treaties with a slew of countries, and an India-origin investor would do well to study the tax angle, based on the property’s location.
 
Similarly, foreign property markets also have their own individual regulatory and pricing mechanisms and land laws governing investments into immovable property, therefore checking one’s investment eligibility in the country of choice is usually a good place to begin.