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FEATURES/Buying A Home Abroad | Nov 17, 2012 | 11615 views

Six Global Hotspots Which Can be Your Home

Six locations that are worthy of your money
Six Global Hotspots Which Can be Your Home
Image: Getty Images
A villa for sale on the coastal road between Larnaca and and Limassol in Cyprus

R

eal estate, like shortcuts through cities or the best biryani in town, is something that everyone will give you advice on as soon as the topic comes up. When you’re looking to buy real estate abroad, however, there are an entirely  different set of factors to take into account. You need to change the way you approach an acquisition.

A studio in a European capital for the child at university? An equatorial villa for that balmy tropical getaway? A plush city centre apartment to park your traders? Indian buyers are taking into account a mix of reasons to put money in overseas property.

Before we get the big three traditional hotspots—London, Singapore and Dubai—out of the way, let’s understand the Indian buyer. Individual buyers tend to be the new-age businessmen in the 35-50 age group who already have a first urban home in a metro, a second holiday home in places like Goa or Lonavla and are now looking to buy a third property. The typical reasons for this international investment differ and interestingly, they tend to depend on which city the buyer hails from. For example, younger investors from Bangalore are more open to alternative, exotic destinations, whereas Delhi buyers are swayed by competition in social circles. Industrial buyers tend to pick up two centrally located apartments at once. In some cases, they are meant for children or parents to occupy and in others, they serve as rental purchases. Sometimes, they are used as leverage for foreign bank loans. In today’s volatile world, having a home abroad is a way to hedge your bets and spread your risk.

London calling
The words ‘risky investment’ and London don’t usually go together. Indians have a historical connect with London—more with its concept and its status than the city itself. According to Mona Jalota of Knight Frank India, London has always been the “aspirational” buy and this shows no signs of changing. There are two main groups of buyers: Those looking to pick up studio apartments for their children studying at a local university and big-ticket investors looking for central London properties. The central London housing bubble has ensured that buying an independent house or large apartment just for staying is not a viable option. According to a Knight Frank report, “Prices for the most sought-after central London properties have risen about 44 percent in the last three years, more than twice the increase across the capital as a whole”. Luxury 1BHKs (an apartment with one bedroom, hall and kitchen) start at £1 million with iconic properties like 1 Hyde Park starting at £6 million. Two BHK houses in the Greater London area, like the swanky suburbs of Wimbledon and Chiswick come for a price tag of at least £500,000. The government levies a stamp duty of 4 percent on homes costing £500,000-£1 million, 5 percent on those priced at £1 million-£2 million and, as of this March, a whopping 7 percent on homes above £2 million.

Besides its aspirational quality, there are compelling reasons why Indians love to invest in the real estate of this famous old city. London is a global financial and trading hub for sectors like banking. Because there is no language barrier, it also serves as a gateway to Europe and a good base for commercial buys. As a city, its real estate market has been resilient compared to the global one in spite of analysts claiming for months that the bubble will burst. The reality is that in the light of the Eurozone crisis, upmarket boroughs like Kensington & Chelsea and Hammersmith & Fulham have become the one-stop investment destination for the rich and famous from Russia, China and continental Europe. Its market defies the global slowdown because there is always an oligarch or two sniffing around and keeping prices high. Over the years, London has shown that it is an expensive but sound investment. 

This article appeared in the Forbes India magazine of 23 November, 2012
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