With the U.S. economy picking up, the residential property market in the country is back on track. As you might expect there is a lot of interest in properties in the USA from the usual suspects – the Chinese, Britons, Canadians and Russians.
There is interest coming in from Indian investors as well. So if you’re looking to sell your property in the USA, let’s quickly look at how you can take advantage of the new development.
Mumbai’s real estate industry has a secret – over two-thirds of the real estate developments here are delayed by a minimum of six months. Further, even when the apartments are finished, they are likely to be marred by poor construction quality.
That means investing in Mumbai can be very frustrating for the rich and loaded of India. This leads many to look to invest in properties abroad. Because of the rising income levels in India, and a growing awareness of the process of buying overseas properties, there are a number of Indians who are now acquiring properties outside the country.
They are buying everything from holiday homes, villas, chalets and studio apartments. They are buying in London, Dubai and Singapore, which have a sizeable Indian community. And they are buying in the USA, a country that every Indian, at some level, shares a fascination for.
The US National Association of Realtors reported that Indian buyers had purchased properties in the USA worth a record $5.8 billion in 2014. This represents a growth of 6 percent over 2013. Indians spent an average of $459,028 on acquiring properties in the USA.
New York, Los Angeles, Las Vegas, Dallas and Chicago were the most popular cities with India buyers. Many Indian high net worth individuals who have bought properties in the USA are naturalised American citizen or hope to be so in the near future. A lot of Indians have extensive business relationships and family ties in several American cities.
What makes buying properties in the US such an attractive option is that the property market in America has largely recovered from the housing crash of 2007-08 and homes and apartment in most US cities are very attractively priced. They are ripe for the picking, so to speak, and any savvy investor would want to take advantage of this.
Many resident Indians are snapping properties in the US as well, encouraged by the relaxing of the caps on investments abroad by the Reserve Bank of India. Resident Indians are allowed to invest up to $125,000 on properties abroad in a single year under the new rule.
Now the average cost of properties in the US is $450,000 which is much more than the cap imposed by India’s Reserve Bank. However, what this means is that Indian investors can now pay for an average American property in instalments over a period of 2 years.
Anuj Puri, chairman and country head of real estate consultancy firm JLL India says that the cap on foreign investment in properties abroad by the Reserve Bank of India shouldn’t really be a problem: “This investment limit is a small but important window. A married couple can now buy a small property in a US suburb if they have the inclination to do so. Previously, real estate, as an option, was entirely out of the LRS scheme and the limit purview."
Most Indian investors prefer to buy apartments in all cash deals. They do their research and don’t take too long to make the purchase. This makes them perfect buyers for those looking to sell a property in the USA.