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Discontinuation of The Reduction Of Fixed Deposit Placement Based On Property Purchase And MM2H Approval By Government Pension
Kindly be informed that MM2H Centre has discontinued the reduction of Fixed Deposit placement based on property purchase worth RM1 million and above in Malaysia. Also discontinued is the MM2H...
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Thursday, 15 July 2010 00:00

Perhaps it was the India Shining dream or just the call of the homeland. Be that as it may, Dubai-based Namrata and Nilesh Pant’s dream to make Mumbai their new home shattered early this year. The chartered accountant-engineer duo, who have an ancestral home in Chennai, planned to relocate to Mumbai in the next two years. But all they could find for their budget of Rs 1.5 crore was a two-bedroom flat in south Mumbai. For the same price they landed a two-bedroom villa just a few minutes drive from Dubai.

The Pants’ experience explains why more and more Indians are queuing up to buy real estate in places like the UAE, UK, Malaysia, Singapore and Thailand. Some want to have a holiday base and others look at it as an investment but all of them are discovering that property abroad is as expensive or sometimes even cheaper than in India, which makes it perfect for a second, or third, home. The RBI move to double the amount an Indian can invest abroad has further fuelled the trend. Now a couple can invest $200,000, or Rs 82 lakh, every year.

Dubai is one of the hottest destinations when it comes to parking your money in property abroad.

“Buying property in Dubai draws no taxes and even if you put your property on rent the income is completely tax free,” says Raja Kaushal, CEO (India) for Dubai’s real estate firm Better Homes. And the prices are comparable to those in desi metros— starting from as low as Rs 30 lakh for a studio apartment in the International City project in Dubai going to Rs 1.5 crore for a two-bedroom apartment with a sea view. That is cheap when compared with a similar flat in Mumbai if you take into account the fact that these properties are sold on the basis of carpet area, and not the super area, as in India. The availability of easy bank loans and residence visas in the UAE for property buyers are additional attractions. Given that Dubai is just two and a half hours from Mumbai, flight time, perhaps we are looking at the new-age suburbs here.

The Nakheel Group, a leading Dubai-based real estate developer, has scores of Indian clients. “Most of areas recently developed or under development by the Nakheel Group have been designated as areas where foreigners can own real estate properties. Both residential and commercial types of property are open to foreign investors , ” says Manal Shaheen, director, sales, marketing and customer service, Nakheel Group. “The international appeal of a project like The Palm Jumeirah means that we have more than 70 different nationalities registered as purchasers, including more than 350 investors from India, about 10% of the sales. This makes Indians the third largest number of investors; only behind UAE nationals and the British,” she adds.

But all is not rosy. As Nilesh says, “Property in Dubai appreciates less (30% last year) than in Mumbai but rents are nearly double at 12% (of the property price).”

Then there are Singapore, Malaysia and Thailand, currently quoting cheaper than Delhi and Mumbai while providing much better infrastructure facilities and living conditions. In the past two years since the RBI began easing overseas investment rules, more than 500 Indians have registered for the “Malaysia, My Second Home” venture that is being sponsored by the Malaysian government. “Given the large disposable incomes of people in India and the growing urge of a holiday destination, we are confident that the response from India will be tremendous,” says a Malaysian Tourism spokesperson.

Overseas-based investors are now estimated to account for a quarter of new property purchases in Singapore, which is fast joining the league of the world’s most sought after property areas.

Similarly, UK, especially London, is another highly sought-after address. The demand is particularly high in the mid-range price sector £400,000-700,000 (Rs 3.2-5.7 crore) which means that relatively more affordable locations such as St John’s Wood and Kensington are being considered, says a study by Knight Frank, the global property consultancy firm. It estimates that demand from Indians (along with the Chinese) will go up by 7% annually for some time. And why not, given that prices in some London suburbs are as much as in Mumbai.

In fact, looking at the demand, some land banking firms (like UKLI) have set up offices in India. Land banking firms typically buy fields in the countryside, divide them up and then sell plots for £10,000 each. The downside is that there is no guarantee that the agency will get the planning permission, which makes getting out of such investments difficult, especially in the short term.

Yet, that hasn’t stopped people from buying these plots. Like Delhi based yarn trader Jinendra Jain, who last visited Britain in 1979. He spent £24,000 this year on two small plots around Tunbridge Wells and Bromley, Kent. He reckons that his 600 sq m piece of England, once granted planning permission, could be worth £200,000. He was lured by the prospect of big profits—over 700%—and the fact that prices have almost tripled in Indian metros.

However, before you run off to buy an Italian villa, a Bulgarian ski chalet or a Caribbean beach house, do remember that prior research is the name of the game. First, gather general information on your potential destinations, such as the regulations regarding foreign ownership in the place of interest—some countries like Switzerland restrict foreign ownership entirely while in Canada and Australia you can buy property but there are no special citizenship benefits. Another aspect that most buyers ignore, but regret at the time of selling, is the local taxation laws.

Be prepared to pay a significant amount in cash—even if easy financing options are available you may be required to deposit at least 40% of the cost of property in cash. These laws are designed to alleviate fears of investors defaulting on payments. The Malaysia, My Second Home venture for one requires you to deposit 300,000 Malaysian ringgits (Rs 36 lakh) in a local bank from which up to Rs 29 lakh can be withdrawn after one year for purchase of a house and the rest has to stay in the bank for the duration of your stay in Malaysia.

Also be on the lookout for newer areas being added on the global real estate map every year. “St. Kitts & Nevis in the Caribbean is an upcoming destination. You can become a citizen and legally obtain a passport without any residence requirements if you invest in real estate there,” says Christian H. Kalin, principal, Henley & Partners AG.

Your best bet would be to hire a licensed real estate agent who has experience with foreign investors in that country. After all, purchasing real estate abroad is a risky venture. But in the right situation and after taking the right steps, investing overseas can be well worth your time.

House That

A ready reckoner of the hot spots around the globe to pick up property in and the potholes to watch out for


Price : Dirhams 270,000 (1 BHK)-1.5 million for a 2 BHK with a sea view (approx Rs 30 lakh-1.6 crore).

What You Can Buy: Villas or apartments in designated areas on 99-year contract or 50-year lease.

Restrictions: Foreigners can own property, but not the land on which it is built. Lease requires a nod from the three master developers—Emaar, al Nakheel and Dubai Properties. During lease, mortgaging the property requires permission of lessor.

Hot Spots: Dubai, Abu Dhabi, Ajman, Ras al Khaimah.

Citizenship: Foreigners need a residence visa which can be renewed every 5 years.


Price: MYR 250,000- 1,000,000 for apartments (approx Rs 30 lakh-1.2 crore).

What You Can Buy: Apartments.

Restrictions: Foreigners can purchase property with a minimum value of 250,000 Malaysia ringgits (Rs 30 lakh) and can buy up to two residential properties.Not permitted to sell property within 3 years. If sold within five years liable for a flat tax of 30% of the gain. Gains on sale after five years are taxed at a flat rate of 5%.

Hot Spots: Kuala Lumpur, Port Dickson and Penang.

Citizenship: Foreigners get a social visit pass for 10 years; it can be extended after 10 years and buyers can also apply for permanent citizenship.


Price: MRs 1.5-2.5 crore for villas (approx Rs 2-3 crore).

What You Can Buy: Luxury villas in the proximity of the coast under Mauritius government’s Integrated Resort Scheme for foreigners.

Restrictions: Acquisition of commercial property not allowed. Minimum investment of $5,00,000. Maximum area 0.5 hectares.

Hot Spots: South-west Mauritius.

Citizenship: Residentship status is given but only till the property is owned.


Price: S$100,000-1,000,000 for condos (approx Rs 26 lakh-2.6 crore).

What You Can Buy: Flats and condos (approved by government for sale to foreigners); no land or landed property.

Restrictions: Deposit of at least 40% required if you plan to take a mortgage. Restrictions when buying vacant land, bungalows, semi-detached and terrace houses and flats in buildings of less than 6 stories. In most locations 99-year lease properties are available.

Hot Spots: Districts 9, 10, 11 & 15, East Coast, Bishan, River Valley.

Citizenship: The social visit visa, valid for 5 weeks, allows multiple entries and a 30-day stay per visit.

5.United Kingdom

Price: £250,000 (2 BHK flat in Manchester) to £1 million (apartment in a London suburb) (Approx Rs 2-8 crore).

What You Can Buy: Apartments, condos.

Restrictions: No restrictions on buying built-up property. Many land banking firms, like UKLI, have been offering land title for investments. However, no constructions can be carried out on these. Buying plots is purely an investment.

Hot Spots: Birmingham,Manchester, Glasgow, London (Mayfair, Belgravia, Knightsbridge and Kensington) and its suburbs (Hampstead, St John’s Wood).

Citizenship: No special incentive with purchase of property (you get a worker’s visa if you work in the UK or a tourist visa).


Price: Baht 2,000,000- 35,000,000 for houses (approx Rs 24 lakh-4 crore).

What You Can Buy: Registered built-up property.

Restrictions: Direct foreign ownership of land is not allowed. Foreigners are restricted to buying condos only in Bangkok and Pattaya, unless approval has been obtained.

Hot Spots: Bangkok, Pattaya, Samui, Phuket.

Citizenship: Retirement visas for foreigners over 50 years old. However, the retiree has to maintain a bank balance of 800,000 baht and ensure a monthly income of 65,000 baht.

The Essential Checklist

Start by Renting: Before purchasing a property, rent one in a similar location, preferably during the months when the climate is least pleasant, to avoid regretting your decision.

Inspect the Prospective Property: Renting gives you the opportunity to check out every aspect of the property you are keen to buy, even those not apparent at first look.

Consider the Marketability of the Property: Special interest real estate—like a house with unusual architecture or a very large property—is often hard to resell.

Observe Real Estate Price Cycles: Real estate prices tend to follow cycles lasting several years. So it makes sense to examine general price trends in recent years in that location—if prices have risen continuously over a decade, caution is called for, although an unbroken rise in prices does not necessarily mean that a slump will follow.

Check the Legal and Tax Situation: Before a sales agreement or even a preliminary agreement is signed, all important legal and tax aspects must be clarified in detail.

Purchase with the Aid of Experts: Depending on the country, it is worthwhile for a buyer (or seller) unfamiliar with local circumstances to obtain advice from a competent source (broker, architect, lawyer or notary) and have the transaction checked to avoid costly mistakes.


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