Developers from countries other than the US and UK are wooing Indian buyers with citizenship programmes, easier tax regimes and a promise of high rental returns
The Global Wealth Migration Review, a report by New World Wealth, a South Africa-based global market research group, has put India as the six wealthiest country, and projected to be the second fastest growing from 2017-2027, after China. The report also ranks India as ninth in number of high networth individuals (HNI).
“The Indian economy is seen to be in rapid growth mode, and is considered to be among the top investment players,” says Anuj Puri, chairman of Mumbai-based property consultants Anarock.
Driven by these factors, newer geographies such as Cyprus, Thailand, Portugal, are targeting Indian buyers with citizenship programmes, relatively lower property prices and the promise of high returns; while Sri Lanka and Malaysia are banking on easier tax regimes and transparent developer practices.
For Rajashekhar Rangaraj, associate sales director of Al Marjan Island, Ras al-Khaimah, United Arab Emirates (UAE), the focus on the Indian buyer is a matter of competition. “The world is looking at India as a potential market and no one wants to be left behind.”
The new entrants
Traditionally, countries such as USA, UK and UAE have been prime options for Indian investors looking to start a business or buy homes for children studying in those countries.
From 2016 to 2017, Portugal-based property website PortugalProperty.com saw a 30% rise in searches from Indians, according to data from the website. “During this period, real-estate growth in Portugal helped drive demand,” says Michael Vincent, managing director of the portal. Because of this, there is greater capital appreciation and chances of rental returns. “This is particularly true for areas such as Lisbon and Porto,” he adds. Portugal offers a residency permit for investments starting at €500,000, which comes to around Rs 4 crore.
Cyprus is another country that has increased its focus on the Indian investor. “The promise of a European Union (EU) passport and of higher returns on investment (ROI) attracts Indian buyers,” says Pauline Gallagher, vice president of private clients of Cyprus-based property developers, Domenica Group, which participated in the International Real Estate Expo (IREX) for the first time last year. Cyprus offers a citizenship programme starting at €1.5 million of investment in residential property, which is around Rs 12 crore. According to data from IREX, between 2015 and 2017, Cyprus countries showed the most growth.
“Even Malaysia, Thailand, Vietnam and Tokyo have emerged as new markets for Indians,” says Divya Maggu, associate director for valuation and advisory services at Colliers International India, a real-estate services company.
Indian interest in these countries is primarily due to higher rental returns on property. “In India, it is about 1-2%, but countries like Thailand and Malaysia, it is anywhere between 7-9%,” says Amit Wadhwani, director of Mumbai-based real-estate consultancy and brokerage firm, Sai Estate Consultants,
“The majority of these countries require qualified manpower for boosting their own economies from India,” says Puri of Anarock.
Indian buyers are of three kinds – investors, those buying to live in, and those planning to rent the property out. Over the last two years, developers have made subtle but sure changes in reaching out to each category of the Indian customer. This includes an increased participation in trade shows in India, setting up temporary or permanent offices and tying up with brokers in India. “We aim to increase our presence locally and have even established an office in India,” says Gallagher.
“We did our first exhibition in October 2017. We have already planned at least 3 major events in India for 2018,” says Paarash Jung Kadel, international sales specialist of Siamese Asset, a Thailand-based developer.
“If the developers don’t set up an office, they stay for longer in India, networking with stakeholders here,” adds Muddasir Zaidi, executive director-north of Knight Frank, a property consultancy that also helps in global real-estate buying and selling. “An annual visit of a few weeks is almost the norm now,” he says.
While the increased push is evident, actual investments are yet to reflect this trend. “USA, UK, Australia, Dubai continue to be preferred destinations, for their aspirational value, and” says Aditya Gadge, chief executive officer of the Association of International Wealth Management of India, a not-for-profit organisation that deals in education and training for finance professionals. “Companies from countries like Cyprus and Portugal have reached out, but there has not been an actionable interest by buyers yet,” he adds.
“These countries are relatively newer entrants, and a decision to make an investment abroad generally takes six to eight months. So the results are yet to show,” adds Wadhwani.
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