Real estate investment has always been a preferred avenue for higher returns for any individual globally. It is the only investment with low volatility and offers steady appreciation over time in terms of value. As real estate in India has delivered subdued returns in the past few years, wealthy Indians are increasingly looking for good realty investment opportunities abroad; even in a bleak scenario like this.
As per a report, Indian individuals are amongst the top home buyers in Prime Central London (PCL) pushing its prime market to busiest in over five years. The primary reasons for the rise in interest in London real estate are; the depreciation of the Sterling, a fall in property prices, and the UK government announcing a stamp duty holiday that was aimed at revitalising the housing market.
The rental yield and capital appreciation in other countries are higher than in India. NRIs, Ultra-high net worth individuals have always shown an affinity towards purchasing homes abroad. Therefore, it is likely that this type of investment trend will continue and gain more traction in near future. Buying a property abroad has its own set of perks and it also helps in portfolio diversification while acting as a hedge against negative domestic events. Most global cities today have transparent real estate regulations.
A large number of HNIs invest in properties in global cities with the intention of settling overseas. Some countries have a robust exit plan for real estate investors. According to data, a large chunk of remittance is for the education of their children abroad, funds for family members, and to invest in real estate overseas. Apart from the regular real estate hotspots in Europe, most HNIs/NRIs prefer to invest in Cyprus, not only because it is a safe country for a family to relocate during this time of the pandemic, but because of its strategic location geographically makes it a favourable destination for business.
Cyprus offers the best investment climate for businesses to flourish, single-window clearance for approvals act as ‘Ease of Doing Business’, the taxation system is transparent, investor-friendly, and among the lowest in Europe. Cyprus which is also known as the jewel of the Mediterranean offers a superior lifestyle, the country is popular for vacation homes. The legal system is reliable, quick, efficient, and cost-effective, with law firms that are market leaders in their respective fields.
The rules in Cyprus encourages investment in real estate by overseas investors, who are eligible for Cypriot citizenship on investment of EUR 2 million, provided certain requirements are met. Lower levels of investment in real estate in Cyprus can get you a permanent visa. Be it a short-term investment or long-term permanent shift to Cyprus, the country scores high when it comes to investment decisions. This is because of a competent government, an equitable and efficient legal and judicial system, sound macroeconomics fundamentals, and a predictable fiscal environment.
These are the four main pillars of sound investments that in turn, result in a fast-growing economy. The pandemic has forced central banks across the globe to cut interest rates to boost demand, prevent economies from slipping into a recession. The ultra-loose monetary policy by the Central banks in Europe is expected to continue for some time. The impact of the pandemic is negative for most, but it is providing an opportunity for the wealthy HNIs to invest abroad at ground level in terms of pricing.
A strong rebound is expected by mid-2021 and set to continue into 2022 and 2023 in the housing market. The current price correction gives investors a great opportunity to invest in properties abroad at a discount and reap long-term benefits and value appreciation.
—Nish Bhatt is the CEO, Millwood Kane International. The views expressed are personal.
(Edited by : Ajay Vaishnav)
