BANGALORE: The investments by Indians (those with Indian passports) in residential property in the United States rose by nearly 50% to $5.8 billion in the year ended March 2014, compared to the year before. Real estate analysts say top executives in Bangalore’s technology industry, many of who have a close connect with the US, are among the biggest spenders.
Indians constitute the third biggest overseas community to buy property in the US, as per data shared by the National Association of Realtors (NAR), US. Chinese buyers topped, investing a staggering $22 billion, a growth of 80% over the previous year, followed by Canada. UK residents bought as much as Indians, but the growth rate was lower at 38%. In 2012-13, Indians had invested $3.9 billion.
The NAR report, quoting information from realtor.com, said that Los Angeles, Las Vegas, Chicago, Dallas, and New York were the most sought after cities by Indian buyers.
“If you have a specific work visa (typically for six years), and a good credit rating, you can buy a home in the US without having an immigration status. And banks in the US will give you loans at an interest of 3.5% to 3.75%,” says Sudeep Chandran, owner, Terrafirma Developers, whose circle of friends have been buying into the American real estate market over the past four years.
Anshuman Magazine, CMD of property consultancy firm CBRE South Asia, said more and more Indians were buying property outside the country for reasons such as better valuations, portfolio diversification and personal reasons like their children studying in the US.
Mudassir Zaidi, national director (residential agency) at consultancy firm Knight Frank India, adds that the slowdown in the Indian market had led to a spur in buying activity in overseas markets. Besides the US, markets like the UK, Singapore, Australia and parts of Europe are equally attracting the attention of Indian property buyers.
“Purchasing a US property remains affordable with prices still below the peak level attained prior to the Great Recession (December 2007-June 2009),” says the NAR report.
Indians spent an average of $459,028 (Rs 2.81 crore) for their US home purchases. That’s way below the prices of premium homes in India’s top metro markets of Mumbai, Delhi-NCR, Chennai and Bangalore.
“Since quite a number of residential units in the US are held by institutional investors, who had bought them during the crisis years from distressed sellers, it is easy for a foreign buyer to buy from such institutions rather than from individual US house owners,” says Anuj Puri, chairman and country head of property consultancy JLL India.
Real estate observers say Bangalore’s large senior management in IT and technology are among the top spenders in American real estate. Most of them have a close connection with the US. Many work in US-based MNCs in India. Several others work in IT services companies for whom the US is the biggest market.
Farook Mahmood, president of the World Council of Brokers, has helped in referrals for at least six Bangalore-based buyers looking to buy homes in New York, Miami, and the Bay Area. Mahmood, who is also the CMD of Silverline Realty, says that these buyers either work in the US on a posting or travel to the country often.