Indians spent $112 mn in buying property overseas

Indians invested USD 112 million last fiscal to buy immovable properties abroad, up nearly 60 times from 2005-06, says a report.

It said property overseas became affordable in 2016-17 due to strengthening of the rupee compared to the previous fiscal, when buyers had invested USD 88.4 million.

"The quantum of money sent through LRS (Liberated Remittances Scheme) for acquisition of property has increased almost 59 times, from USD 1.9 million in 2005-06 to USD 111.9 million in 2016-17," said the report by Knight Frank India and the International Real Estate Expo (IREX) released today.

However, the share of funds spent on buying homes aboard through the LRS fell from 8 per cent in 2005-06 to 1 per cent in 2016-17, it added.

The report 'Looking beyond Borders' aimed at studying buying behaviour, investment returns, preferences and key drivers pushing resident Indians to acquire residential property on foreign soil.

"Strengthening of the Indian rupee against several global currencies has made investments in overseas homes more affordable than a year ago," it said.

Buying a house in Malaysia is the cheapest followed by Dubai, it added.

Resident Indian buying homes in United Kingdom, Cyprus, Malaysia and Dubai would find cheaper as compared to a year ago but acquiring a residential property in Australia would be 11 per cent costlier.

The findings in this report are based on 10 countries: Australia, Sri Lanka, United Arab Emirates, Malaysia, Cyprus, Mauritius, Thailand, USA, Philippines and United Kingdom.

Approximately 77 per cent of the Indian buyers prefer a property that is less than USD 1 million.

"Resident Indians buying overseas homes at the end of Q2 2012 and selling the property five years later gained from the investments in 4 out of the 5 most preferred international markets," the consultant said.

Residential property buyers in Dubai have benefited the highest with an overall return of 49.3 per cent followed by Australia at 38.7 per cent. UK and Malaysia gave return of 20 per cent and 15 per cent respectively.

However, the returns were negative from Cyprus due to decline in property prices and rupee appreciation.

As per the report, most Indians buy homes abroad for investment purposes followed by the aspiration of having a second home.

Sixty-three percent of the resident Indian buyers preferred compact apartments of less than 1,500 sq ft.

About one-fifth of the resident Indians showed a preference for a villa since countries such as Cyprus and Sri Lanka are perceived as second home options and holiday destinations.