While buying their homes abroad, Indians usually like to invest in property in gateway destinations — places where they can get good capital appreciation and a stable rental yield. And the reasons vary depending on the life cycle of the buyer, says Akash Puri, Director – International, India Sotheby’s International Realty.

In an exclusive interview with Sanjeev Sinha, Mr Akash Puri, Director – International, India Sotheby’s International Realty, shares his views on the current opportunities and the reasons for Indians for investing in overseas property, and why it is important to understand the remittance rules before buying a piece of property abroad. Excerpts:

Where are Indians investing in homes abroad and why?

Indians usually like to buy in gateway destinations such as Dubai, London, New York, Toronto and Sydney; places where they can get good capital appreciation and a stable rental yield. The reasons vary depending on the life cycle of the buyer. While many buy property overseas depending on where their children are studying, some buy purely for asset and currency diversification, some for expanding businesses, and others for a better quality of life.

Is there a change in preference for cities or the reason behind buying a home post-pandemic?

Yes, Dubai and New York have seen greater traction post pandemic. New York gained significant interest because the prices were at a huge discount from historic highs. In addition there isn’t a high stamp duty like other destinations but only a 1% mansion tax for properties under $1 million. Dubai recorded 3.97 million overnight travellers between January and March, out of which 3.76 lakh visitors were from India, according to the Department of Economy and Tourism of Dubai – DET. Ease of doing business, good infrastructure and handling of Covid by the Dubai government, tax benefits and the ability to get a residency visa on the purchase of a 1 million DH property have been the most prominent reasons for Indians to diversify their assets in Dubai. Easy connectivity and a short flying time from India to Dubai also adds to its attractiveness. 

Also Read: Robust NRI investment giving real estate a big push
 
Many countries offer citizenship by way of investments (CBI). Is there an increase in home buying, because of this particular reason? What are the risks or catches in such offerings?

The volatility and uncertainty in the recent years have encouraged the UHNIs to apply for CBI or a second passport to provide them with global mobility and a hedge to the geopolitical risks.
 
More than six lakh Indians have given up their citizenship in the last five years, according to data by the Ministry of External Affairs, 40% of them have relocated to the US. There are hardly any risks associated with such programs. People opt for CBI for the benefits that come along with these options such as visa-free access, advantageous tax regimes, improved quality of life, better healthcare, education and infrastructure. Yes, if there are changes in visa-free access, or the tax status becomes less advantageous, that might be a negative, but countries don’t indulge in such flip flops.
 
How did the Russia-Ukraine war impact the global real estate market? Has it resulted in better opportunities for Indians looking to buy property overseas or it’s the other way round?

Yes, it has, especially for non-EU countries. Dubai has witnessed almost 7000 real estate sales transactions worth $4.9 billion in April 2022. Out of which secondary market sales transactions comprised 60 percent of the total, while off-plan properties comprised the rest, according to news reported by the Arabian Times. Recently a villa in Emirates Hills was bought by an Indian entrepreneur for Dh102.8 million. This is the second highest value sale in this community and made big news.
 
Also, some of the new categories added to the Golden Visa rules are making Dubai real estate one of the most preferred investment assets in the long term.

Also Read: Is this the right time to make a home loan prepayment plan?
 
How important is it to consider and understand the remittance rules and limits before buying a piece of property? Do you think the present limit is enough for Indians to buy property at the desired location?

It is the most crucial aspect. It is difficult to find a piece of property in overseas central locations for 250k USD. To overcome this limitation usually family members club their LRS limits to buy any property. Yes, if the LRS limits were doubled, it would make purchasing the asset much easier within one financial year in the gateway cities across the world.

If the existing remittance limit does not permit someone to buy the desired property abroad, what are the other options he has?

If the existing limits don’t allow someone to buy a desired property in an individual capacity, then it’s best to club 4 members of the family and transfer up to 1 million USD/financial year or transfer the LRS limit permitted overseas into a bank account for a few continuous years, to collect enough funds to purchase a piece of property. In such cases, we also advise opting for an off-plan property, and use the years under construction to keep making part payments to purchase the property.