City too pricey? Try UK, US, Dubai

For budgets above $200,000, Mumbai has serious competitors abroad

NEW YORK/LONDON/MUMBAI: For those who think real estate investment anywhere in south and central Mumbai is nirvana, here’s news: you can get better deals in the UK, US or Dubai. And all of it without excessive pollution and slums all around you.

Thanks to a foreign exchange relaxation, Indians can now legitimately remit up to $200,000 (Rs79.26 lakh) every year for investment purposes, including property. With two persons (you and your spouse), the amount can be raised to $400,000 a year, enough to buy you decent property in many global cities.

A budget of Rs80 lakh will banish you to the outer fringes of Mumbai’s western suburbs. On the other hand, a two-bedroom-hall-kitchen (BHK) flat at Dubai’s Marina would cost Rs35-60 lakh. More opulent residential configurations would cost Rs1 crore and above. This is a steal compared to rates in Mumbai. In Dubai, Indians cannot actually buy property, but they can lease one for 90 years. On this basis, it is possible to obtain four-bedroom luxury apartments or even a decent-sized villas for up to Rs1.5 crore.

This kind of money will not get you much in New York or London, but you can get great property for Rs4-5 crore — upwards of around £500,000 — which is what decent property in south and central Mumbai now costs.  Turn to p16;
 
In this range, you can get flats in Worli Naka at Ansal Heights (1,700 sq ft), Lower Parel (1,753 sq ft at Marathon Nextgen), or Dosti Flamingo (1,500-2,000 sq ft). But London is an alternative.  

“Two years ago there were hardly any Indians wanting to buy in London, except for those already living here. But in the last year-and-a-half we have seen a phenomenal rise in interest,” Jaideep Singh, head of the India desk at property consultant Knight Frank, told DNA.

Growing Indian interest has forced Savill’s estate agents, Knight Frank’s main competitors in London, to set up an India desk and hold a roadshow of luxury properties in India. Knight Frank says it is easily selling on an average one or two properties a month to Indians. They can be bankers, people in IT and people whose children are studying in the UK. Some of them buy a home to live while travelling to the UK. Most buy properties worth between £500,000 and £1 million.

For those with more Indian middle class price ranges in mind, you can get property in Edgebaston in the heart of Birmingham for £100,000 (around Rs78 lakh). You will still get only a one-bedroom flat. The same amount will also get you two- to three-bedroom houses in the suburbs of Leicester, Birmingham, Coventry and adjoining areas.

There are better opportunities in the US market, where property prices are tanking. “This allows Indians to make kosher investments. Manhattan and San Francisco are pricey but the US is cheap compared to Mumbai and Delhi,” says a Mumbai rice exporter, who did not want to be named. He said he used the weak US housing market to buy a townhouse in Florida.

“I bought a three-bedroom townhouse in Orlando, Florida, for $190,000. It is a good investment. I also wanted a base here as my son studies in the US. Home-owners at Regal Palms can use the club house which has a restaurant, bar and games room. The grounds have heated pools, sun decks and tennis courts. I would never get anything like this for $190,000 in Mumbai,” he said.

Property brokers in Mumbai say that with a budget of $200,000 (Rs80 lakh to Rs1 crore), one can only hope to buy into residential property in places like Goregaon, Malad and Kandivli. You can currently get an 800-1,000 sq ft flat at Sun City (RNA Builders) in Kandivli, and Raheja and Mantri group flats at Dindoshi. A one-BHK flat in a new construction in these areas would cost anywhere upward of Rs50 lakh, while a two- BHK would cost Rs80 lakh-Rs1 crore or more. Mulund, Bhandup and Thane would also be suitable locations, since one would find a handful of two-BHK options within such a budget there.

Not many realtors, though, advise property purchases abroad if they are merely for investment. “With the dollar depreciating further, one is faced with the currency risk. One is also not fully clued into the political climate which may suddenly result in property laws being changed. Also, the local market is so huge. It makes sense to invest in a growing economy like India where one gets a return of 10-15% unlike in mature economies like UK,” says Pankaj Renjhen, Mumbai head of Jones Lang Lasalle Meghraj, global property consultants.

Says Akshay Kumar, managing director of Parklane Property Advisory Services, a real estate consultancy firm: “Investments abroad are restricted to buying a flat in two locations; Dubai and London. I would say Dubai more because of the tax concessions and the ease with which it gives a visa. Also, it is cheaper to buy a flat in Dubai than in UK where property prices are very high.”

But at Rs80 lakh and above, it’s clear that real estate options open up on a global scale. And many Indians are beginning to exercise them.