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MARCH 2012 |


NRIs buying bargains outside India Best of the Blogs


By Pritam P Hans on www. How about an old villa or cottage with a sprawling garden in a serene village in France, Italy or Spain? Yes, a residential property in these countries can be cheaper than premium apartments in places such as Delhi and Mumbai for an NRI (non-resident Indian). Economic troubles in the US and Europe have led to a sharp fall in property prices there. But economic turmoil is not the only reason NRI property investors are exploring overseas locations. “Some international places off er themselves as sound investment destinations, irrespective of the overall economic situation. They are reasonably liquid and not volatile,” says Anand Narayanan, national director of the residential agency Knight Frank India. And buying properties abroad is not an unusual thing for non-resident Indians. However, many high net worth Indians who travel overseas frequently are now becoming attracted by the potential for price appreciation in other countries. “Dubai, London, New York and Singapore are traditionally the most popular property destinations for Indians. Except for Dubai, the other three have given attractive infl ation- adjusted returns in the last two years, as well as over a longer time horizon. Exotic resort locations in Thailand, Florida, Mauritius and south of France, too, are in demand along with education destinations such as Sydney and Melbourne on the list too. In the eyes of the discerning Indian buyer, they off er better value for money compared with properties in India,” says Narayanan. But it is the holiday home segment that is picking up the strongest NRI momentum. After the price crash, Spain, Greece and Italy have become attractive. And yet, while continental Europe has some good options, London remains the popular choice of those who can aff ord it.

Aldar: Abu Dhabi’s problem child Best of the Blogs

By Tom Gara on www. What to do with a real estate developer that built the world’s biggest indoor theme park, complete with its fastest rollercoaster, but can’t seem to make money? That question has been bothering the government of Abu Dhabi for some time now, as it grapples with the future of Aldar, a state-owned property company that has needed just as much help as the most troubled empire-builders in neighbouring Dubai. Abu Dhabi made headlines around the world in late 2009 by bailing out Dubai and its tumbling property companies to the tune of $10bn. But its second $10bn rescue, conducted over the last year, has been less high-profi le. In January 2011, the Abu Dhabi government stepped in with about $5.2bn of support for Aldar, which was facing about Dh15bn ($4.1bn) of debt due that year. Less than a year later, the government announced a second bailout, worth about $4.6bn. Spending $10bn bailing out a distressed real estate developer, little more than a year after spending $10bn bailing out another distressed real estate developer

seems to have dampened Abu Dhabi’s enthusiasm for the whole real estate lark. And last month, after the second Aldar bailout, talk began of Abu Dhabi’s strategic investment vehicle, Mubadala, planning to exit the property development business altogether. Mubadala has “taken some gambles and I think been proven wrong in some of the businesses that we’ve done,” said its chief operating offi cer, Waleed al-Muhairi, at a conference in Abu Dhabi. While Mubadala’s role in the emirate’s real estate market was “critically important” as Abu Dhabi sought to build high-profi le “signature” developments, changes in the local and global economy meant the company now spent “a lot of time talking about how do we hand off this capability.” That’s not to say that no- one will end up “parenting” Aldar. These kind of negotiations have a way of eventually working out in Abu Dhabi, where a tight network of state-owned companies intermingles with businesses keen to stay in the good books of a government that plans on spending hundreds of billions on infrastructure projects in the coming decades. And the development prospects are looking up since last week’s announcement that Abu Dhabi will go ahead after all with dozens of major development projects, which had been thrown into uncertainty by a major state spending review. With Louvres, Guggenheims, hospitals and entire new transport systems given the go-ahead, snapping up a distressed property developer probably doesn’t seem quite as painful as it once might.

Mexico and Cuba lead in the U.S.A Best of the Blogs

By Sam DeBord on Buyers from outside of the United States are taking advantage of the overall affordability of real estate in today’s market. The number of foreigners purchasing homes at discounted prices has been rising significantly, according to a report based on statistics from the National Association of Realtors. International buyers are clearly sensing that the U.S. real estate market is bottoming out and buying homes will protect their assets long-term. While some of these home buyers have found ways to finance homes at the historically-low interest rates offered by U.S. banks, many are cash investors who move quickly to close transactions. The top three states in which foreign investors buy U.S. real estate are Florida, California, and Texas. 1. Florida: Thirty-one percent of all home purchases in that state are made by foreign buyers, with most coming from Cuba, Haiti, and Colombia. 2. California: 12 percent of all home purchases (most coming from Mexico, the Philippines, China, India, and Vietnam). 3. Texas: 9 percent of all home purchases (most coming from Mexico, India, Vietnam, China, and the Philippines). 4. Arizona: 6 percent of all home purchases (most coming from Mexico, Iraq and India). It might surprise some to note that Mexico was the source of the most international investors purchasing homes in the U.S. While much media attention is placed on money coming from China for foreign investments, Chinese buyers were not nearly the largest source of purchases in these southern U.S. states. Instead, they have lots of Canadian purchasers. (Sam DeBord is a realtor with and Coldwell Banker Danforth.)

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