Indians’ foray into Overseas Property Investment

Indians’ foray into Overseas Property Investment

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On 29th April the Hindu reported on the attempts of the Reserve bank of India (RBI) to stem India’s rising prices. This has included a tightening of domestic monetary policy with borrowing becoming more expensive for all except very small housing loans (of up to R 2 m, less than $50,000). At the time the RBI has been relaxing exchange controls for private individuals and corporations. Private investors are now able to take up to $100,000 per person out of the country each year so that Indian families are finding foreign property investments are within their reach. Indian companies are now able to borrow and invest more abroad than before although it is yet to be seen if this change is going to translate into new investments in overseas property developments.

The parts of the world that Indians are showing most interest in are SE Asia, especially Malaysia and Singapore, Dubai and cities such as London and New York. In SE Asia property investments are expected to rise on the back of the increased popularity of these countries as tourist destinations for Indians. Singapore is only 1,500 miles away from cities such as Bangalore. Air India serves Bangkok, Kuala Lumpur, Singapore and Jakarta. Property prices in SE Asia and the Gulf are lower than those found in cities such as Mumbai or Delhi while at the same time offering superior infrastructure, environment and facilities.
It looks as if the attraction of foreign property for Indians will influenced chiefly by the condition of the India’s property market. Writing in the Business Standard on 16th March, R Ravimohan, the CEO of Crisil (part of Standard & Poors) said that the property market in cities like Mumbai was being fuelled by speculation and residential and commercial property. He cited Singapore and Dubai as favoured alternative locations for Indian investors. In the same month Crisil published its Indian Real Estate Insight Report which included a strong plea for sophisticated ratings for property developers, giving Singapore as an example of a more robust rating regime. Real Estate stocks have fallen on the Mumbai Stock Exchange in recent days and commentators differ on whether this is a short-term blip or the start of a longer-term trend.

The Malaysian Tourist Board has launched ‘Malaysia, My Second Home’ (MM2H) to market property to well-to-do foreigners, including Indians who wish to make frequent holiday visits. So far the scheme has attracted interest from 500 potential Indian investors but the tourist board hope that this number will have risen to as many as 4,000 by 2010. Holiday visits by Indians to Malaysia are expected to rise to 400,000 in 2007 compared to 279,000 last year.
Comments with news about overseas property investments by Indian corporates would be most welcome.