Indians still banned from buying overseas property
Photo: Add1Sun
The restriction upon overseas investment came into effect in the second half of last year as the rupee weakened significantly. The measure reduced allowed remittances through the Liberalised Remittance Scheme from $2 lakh to $75,000 per year and prevented the use of the money for the “acquisition of immovable property, directly or indirectly, outside India”.
The currency, though, has since strengthened, while economic sentiment is beginning to improve. Indeed, the victory of Narendra Modi's NDA government in the recent elections has given a boost of confidence to the country. Sentiment is high even in the housing market.
Santhosh Kumar, CEO of Operations for JLL India, predicted that "property is once again going to become the most popular investment option, as there will be significant appreciation in real estate prices on the heels of higher demand in the coming years".
"With the easing of regulations, developers are expected to speed up the construction process, providing relief to buyers who have already invested," he added.
"The big names of the Indian industry have welcomed the new government with a hope that it will bring the economy back on track and raise the currently plummeting GDP to 8-9% in the coming fiscal. The new government at the Centre is expected to infuse life in the existing policy paralysis in the country by removing the major bottlenecks that are deterring growth."
As optimism spreads, the RBI has begun to scale back its limits, increasing the amount that Indians could remit overseas "without end-use restrictions" for legal purposes to $1.25 lakh. While this is good news for many Indians, though, the RBI's updated documentM said that all other conditions of their previous directive will remain unchanged.
The decision comes as a blow to property markets overseas. Indeed, Indian investors were becoming increasingly influential last year. They were the second biggest group of buyers of prime London property in 2013, according to Land Registry data, spending £449 million on 221 £1million+ properties, topped only by the £536 million spent by Russian buyers.
In the first half of 2013, meanwhile, Indian buyers were the top overseas buyers of Dubai property, spending over Rs 132.6 billion in the first half of 2013 - almost as high as the Rs 149 billion they invested in the whole of 2012.
According to the National Association of Realtors, Indian buyers were the fifth biggest group of non-US investors in America, responsible for more than $3 billion worth of transactions.
Now, though, Indian buyers continue not to be allowed to carry on their overseas investments.
"The dream to own a house will soon turn into reality," said Santhosh. For those wishing to own a home abroad, though, their dreams will remain just that.