The overseas property market may be in for
a sudden drop in Indian investment owing to new Reserve Bank of India rules
aimed at stablising the Indian economy. The effects on international property sales could be global however one region may suffer more than most. The Dubai real esate market benefits from sustained property investment from Indian overseas buyers
but could now face a huge drop in demand.
Indians were the biggest property
buyers in Dubai in the first half of the year, spending more than Dh8 billion
in total across 499 transactions, according to figures from the Dubai Land Department.
India has economic woes which reveal that
India imports much more than it exports, the current account deficit is at an
unsustainable 4.8% of GDP
Output growth has been decelerating for
several years, and private investment has fallen for 10 consecutive quarters.
Industrial production has declined over the past year. But consumer price
inflation is still in double digits, providing all the essential elements of
stagflation (rising prices with slowing income growth).
A senior finance ministry official
confirmed that the new rules, which stipulate that companies will now have to
seek RBI’s permission if they want to invest any amount beyond their net worth
abroad, will be applicable for all pending applications.
Indian individuals are now subject to an
annual cap on outflow which has been slashed from $200,000 to $75,000. There
is also now a ban on overseas real estate purchases.Indians have been investing heavily in property abroad in recent years and the government clearly wants that money kept in the country.
The US real estate market will also lose a
welcome flow of inward investment from India , Indian are among the top five
buyers of property in the U.S. by country of origin in the year until the end
of March, according to research by the National Association of Realtors.
Approximately 90 per cent of reported
purchases were detached single-family properties and 7 percent were commercial
properties or land, according to the NAR survey. The median price of a home
purchased by an India citizen was $300,000
