Buying a property is one of the most important decisions you will ever make, so determining what you want and where you want it is of utmost importance.
In the Middle East the property market is booming with Dh1.1 trillion worth of developments being built, 70 per cent of which is in Dubai. Yet the decision whether to purchase a property or not is always a difficult one, especially in a market that is not yet matured. As a result many residents are considering buying further afield.
This weekend the third Indian Property Exhibition is taking place in Dubai where buyers can find out about new developments across India and purchase their dream home.
Sunil Jaiswal, President and CEO of Sumansa Events, which organised the exhibition, says there are two types of buyers looking for property in India.“From our research half of the people want to buy a home for investment purposes and the other to live in when they retire, but there are pitfalls especially for foreign investors,” he says.
If buying in the Subcontinent is something you are considering, it is worth doing your homework as Indian law states anyone buying into the real estate market must have an Indian passport. However, if you are not an Indian national there are ways around it, including setting up a company.
Philip Ward, Managing Director of Haven Mortgage Solutions, says: “The Indian property market is currently booming and with high capital gains forecast by many it is not surprising that it is attracting interest from investors all over the world.
“But for foreigners of non-Indian descent the options are restrictive. This is primarily because they cannot own property themselves unless they have lived in India for more than 182 days in a financial year and have permission to buy from the Reserve Bank of India. Some overseas investors have avoided this by setting up an Indian trading company and buying property through that but this brings with it potential taxation and currency control issues and it is likely this loophole will soon be closed.”
The developing market is so diverse – whether you have Dh200,000 or Dh2 million there is something for you. From city apartments in Chennai for as little as Dh150,000 to villas worth Dh9.5 million in Hyderabad there is a lot of choice, that is of course if you are an Indian national.
Foreigners wishing to invest in India also face higher charges than their Indian counterparts, according to Ajay Diwari, City Manager for Better Homes. “Firms often join forces with a local partner because they have to show the purpose of the property,” he says, adding that it is best to register the property under a local name.
But for Non-Resident Indians (NRIs – Indians living outside of India and foreign citizens of Indian origin) buying residential property is relatively simple.
“There are a number of banks that will provide mortgage finance of up to 90 per cent at attractive interest rates. The application process is relatively simple and can often be completed without the need to travel to India,” says Ward.
One NRI who bought property in Goa recently said he had no trouble despite having lived in Dubai for 30 years. “I went through a reputable developer and everything was processed pretty quickly. But do be diligent. Lots of people could be involved in the purchase, so check out everyone you deal with before you buy,” he says.
Imtiaz Ahmed, Assistant Vice-President of Axis Bank, says the quality of construction is the biggest potential pitfall, not least because many properties are being built at such a fast pace they are not always structurally sound.
“Similarly, when it comes to financing your property abroad you have to be careful about buying in the country in which you live – there are a number of things to watch out for,” says Ahmed.
He does, however, have one piece of good news. “NRIs can give power of attorney to a member of their family so they can purchase a property, do the title deeds, get a loan and complete the whole deal without even leaving Dubai.”
But it is not just India where the overseas property market is booming. A recent series of seminars on Australia have showcased the best properties on offer in the southern hemisphere continent, too.
International Home Brokers Limited held an event in a bid to lure people in Dubai to invest in Melbourne in the south and Cairns in the north. The wide range of properties range from surburban apartments to villas by the sea.
But despite Australia being very different to India, the reasons for buying appear to be the same. There are the nationals who live abroad and want a home when the time comes to move back and those looking for an investment.
For non-Australians buying is restricted to new developments only and buyers need a 50 per cent deposit, but raising a mortgage is attainable. Company Principal Nigel Clark says: “From my experience Queensland is the most preferred location for expatriates and nationals. Australia has tight immigration controls, but we don’t discriminate against people who are looking forward to invest in the country’s economy.”
Mohammed Ibrahim Taher
Regional sales manager Taher, 30, bought an apartment in Bangalore, India, a year ago after finding the development at a previous Indian property exhibition.
“I’ve lived in Dubai for three-and-a-half years but I wanted my first investment to be in my home town. I purchased the apartment off-plan and once it’s complete I’ll rent it out.
It was difficult to find a place when I first started looking, but one development caught my eye that fitted my budget, so I decided to go for it.”
Graphic designer Price, 30, lives in Dubai but is waiting until she moves back to Australia before buying a home.
“I was going to buy a one-bed apartment off-plan in Melbourne because I wanted to get a foot on the property ladder. Contracts had been signed, however due to communication difficulties between the sales office and my lawyer, the company pulled out during the cooling-off period. I’m now going to buy in my hometown of Sydney when I move back as first-time owners are given a grant and I will also have more control over the purchase.”
Overseas property boom