Realty Check: Indians Invest Abroad as the World Comes to India

By | August 5, 2017

More and more Indians are truly feeling at home abroad. Literally so. Indians were the biggest buyers, in terms of volumes and values, in Dubai last year, according to statistics released recently by the Dubai Land Department. Indians in the United States are also making huge investments in residential property in the country, figuring among the top investors in the sector. And while Indians are busy buying property abroad, overseas investments, primarily from the US, in Indian real estate have been on a surge too.

Indians buying real estate in Dubai

Indians were the leading foreign investors in Dubai in the first half of 2017, accounting for 25 per cent of all transactions in real estate, according to the DLD report. They bought the equivalent of Rs 208 billion worth of property across 6,263 investors, the Hindustan Times reported. Indians are followed by the Pakistanis, British, Chinese and Canadians.

“The factors driving such interest are not hard to identify — $1 million (about Rs 6.3 crore) would get an investor a mere 1,000-sq-ft flat in Mumbai, while the same sum in Dubai will fetch you at least 50% more,” the publication quoted Anuj Puri, chairman of Anarock Property Consultants, as saying. Puri added that while Dubai is the most preferred destination, Kuala Lumpur and Singapore are also emerging.

Indian Investments in US

Indians emerged as the fifth largest investors in real estate in the US during the 12-month period ending March 2017, buying residential property worth $7.8 billion. The deals were supported by mortgage finance, and the properties were mostly bought for use as primary residence or for use by a child studying in the US.

Chinese nationals topped the list, buying residential property worth $31.7 billion in the same period, followed by the Canadians, British, Mexicans and Indians, according to the report, “2017- Profile of international activity in US residential real estate” released recently by the National Association of Realtors (NAR). Between April 2015 and March 2016, Indians were at the third spot in the list of biggest buyers, with investments worth $6.1 billion. However, they slipped a couple of places down in 2016-17 due to a rise in investments from people of other nationalities.

While most buyers from China, India, and Mexico were working and residing in the US, a majority of those from Canada and the UK were non-resident buyers, the report showed. Almost half of all foreign sales were in Florida, California and Texas, followed by New Jersey and Arizona. Illinois, North Carolina, Georgia and New York were the top locations. Foreign buyers purchased $153 billion of residential property in the US between April 2016 and March 2017, registering a 49 per cent surge over the figure of $102.6 billion recorded during the corresponding previous period. Foreign buyers purchased 2.84 lakh residential properties in the country in April 2016-March 2017, as against 2.14 lakh properties sold in the earlier corresponding period, marking a rise of 32 per cent.

Overseas Investments in India

Meanwhile, overseas investments in real estate in India rose by a whopping 137 per cent, from $3.2 billion during 2011-13 to $7.6 billion during 2014-16.

The United States accounted for over 40 per cent of the investments and made the largest share of foreign investors. Canada (18 per cent) and Singapore (17 per cent) figured next, according to Knight Frank’s Active Capital report, a global property analysis of capital flow patterns across world markets.

Mumbai emerged as the most favourite destination for foreign investments in 2016, attracting 39 per cent of capital flow in India, while Bengaluru, Chennai and Delhi received 11 per cent, 10 per cent and 4 per cent of capital flow, respectively.

Foreign investors were largely drawn to office spaces and retail sectors, and the two segments together accounted for 72 per cent of the investments. By 2018, over 30 per cent of the total global real estate transactions in India will be cross-border, the consultancy firm’s report showed.