RBI doubles warchest for dollar deals abroad
A flat in Dubai's Marina, a one-bedroom apartment in Central Bangkok's 'The Lofts' or at Pattaya's 'Northshore' project - both costing $100,000 (Rs 45 lakh) - are within striking distance for the Indian property seeker.india Updated: Nov 01, 2006 14:46 IST
A flat in Dubai's Marina, a one-bedroom apartment in Central Bangkok's 'The Lofts' or at Pattaya's 'Northshore' project - both costing $100,000 (Rs 45 lakh) - are within striking distance for the Indian property seeker.
Those snooping for real estate abroad have to thank the Reserve Bank of India (RBI), which has allowed individuals to remit up to $50,000 (Rs 22.5 lakh) per financial year as against the earlier limit of US $ 25,000 (Rs 11.25 lakh). The earlier ceiling allowed investors to dabble in stocks, but not in property in foreign capitals and resorts.
It works this way: Since the remittance ceiling or $50,000 is per individual, a husband-wife team can together invest up to $100,000. When invested over two financial years, but effectively over two consecutive months - one tranche in March at the end of a financial year and another in April in the new financial year - the couple can legally invest $200,000 (Rs 90 lakh). This means properties in the Rs 70 lakh to Rs 1 crore range are now within reach.
"Dubai would be a popular spot, within range and on the Indian radar. Malaysia's Penang, Phuket and Bangkok in Thailand can be hot property-buying destinations,” said Pranay Vakil, chairman of broking house Knight Frank India.
The choice could lead one to even the Umbria, in Italy’s central hills west of Tuscany, where 45 newly-restored studio apartments have been put on sale for 150,000 Euros. On the other hand, even studio apartments in popular but expensive cities like New York London and Hong Kong would be out of reach, Vakil warned.
But a one-bedroom apartment in Singapore’s East Coast Parkway is a possibility. Most corporate executives and individuals that travel abroad welcomed the move, but bankers warned that the government should make reporting on foreign remittances more stringent. “The ceiling has been raised partly because of the large leakages under the previous dispensation,” felt Vakil.
However, corporate groups have always owned properties in London and elsewhere as the law allows companies to purchase property abroad from their export earnings to house their employees. But not all high net worth individuals (HNIs) are looking at investing in property. Some are eyeing the stock markets. “This is a great opportunity for investing in shares abroad,” said Sunil Alagh, former managing director of Britannia. Besides, legal hassles may prevent many from buying properties.