Indians’ spends on overseas homes swell manifolds: Knight Frank report

Indians’ spends on overseas homes swell manifolds: Knight Frank report
06/10/2017 , by , in News/Views

Indians’ spends on overseas homes swell manifolds with buying homes becoming cheaper today vis-à-vis 2016, according to ‘Looking beyond Borders’ report released jointly by property consultancy firm Knight Frank and International Real Estate Expo (IREX). The report said that the strengthening of the Indian rupee against several global currencies has made investments in overseas homes more affordable than a year ago.

Australia, Sri Lanka, United Arab Emirates, Malaysia, Cyprus and United Kingdom emerged as the preferred destination for Indians buying homes abroad for investment purposes followed by the aspiration of having a second home.

“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,” mentioned the report based on detailed analysis of the 6 most-preferred markets across the globe. As per the findings, 1 out 4 resident Indians prefer to spend more than $ 1 million for a house overseas with68% Indian buyers picking up compact apartments of less than 1,500 sq ft – the most preferred property size.

According to the report, 51.6% Australia witnessed the highest property appreciation followed by Malaysia (43.8%) between Q2 2012 and Q2 2017. Property buyers in Dubai have benefitted the highest with an overall return of 49.3% followed by Australia at 38.7%. “Dubai offered dual returns as the Indian Rupee depreciated versus the local UAE currency and property prices in the Gulf destination appreciated between Q2 2012 and Q2 2017,” report mentioned.

According to the report queries from resident Indian buyers increased marginally from 11% in 2015 to 15% in 2016 and held steady around that mark in 2017.Similarly sales volumes rose from 6% in 2015 to 8% in the subsequent year and sustained at 7% this year. About one-fifth of the resident Indians showed a preference for a villa ostensibly since countries such as Cyprus and Sri Lanka are perceived as second home options and holiday destinations.

“Approximately 77% of the Indian buyers prefer a property that is less than $ 1 million,” the report mentioned. However, the share of funds spent on buying homes aboard through the Liberated Remittances Scheme dwindled from 8% in FY 2006 to 1% in FY 2017. But the quantum of investments rose by almost 59-folds from USD 1.9 mn in 2005–06 to $111.9 mn in 2016–17.

According to Dr. Samantak Das, Chief Economist & National Director – Research, Knight Frank India “Our perceptions on buying international property have been largely confined to high net worth individuals buying luxury housing at picturesque foreign locations. At the onset this report looks beyond that stereotype and throws light on mainstream residential property purchased by resident Indians from other income groups. It further delves into buyers’ preferences over size of homes, budgets and most importantly the key drivers pushing resident Indians to acquire homes abroad. The report findings also reflect healthy returns on investments for such buyers which augurs well for the real estate sector as a whole.”

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