Indians invest $5.8bn in us real estate

Photo: Fifth World Art

Indians invested $5.8 billion in US real estate in the year to March 2014, according to the National Association of Realtors, an indicator of just how high demand for American property is.

On average, they spent $459,028 on properties in cities ranging from New York to Las Vegas.

"This is definitely an interesting finding," says JLL India boss Anuj Puri. "Indian HNIs who have obtained American citizenship and are settled there have several reasons for investing in properties in the US. Apart from India’s long-standing love affair with America and all things American, many Indians who have become naturalized US citizens have business interests as well as families in major American cities."

For resident Indians, though, investment has been severely hindered in recent years, following the Reserve Bank of India's decision to cap outward remittances, preventing money going into fixed property overseas.

Since that drastic announcement, though, restrictions have eased slightly, with the annual cap on remittances raised from $75,000 to $125,000. Now, buyers are taking advantage of the opportunity, even if they have to pay in instalments.

JLL hails it as "small but important window", noting that "a married couple can now together buy a small property in a US suburb".

There are other options open, though, notes Puri: "Since quite a few apartments in the US are currently held by institutional investors who had bought them during crisis from distressed sellers, it is easy for a foreign buyer to make such deals with such institutions rather than with individual US house owners."

"The NAR report also mentions that of the total worth of apartments bought by Indians, close to 23% had a component of cash, which could either be held by Indians in their US bank accounts," he adds. "This is particularly applicable to businessmen and exporters. Therefore, it is not necessary for these Indian buyers to bypass the RBI limit on asset purchases for big deals abroad."