It’s cheaper to stay on rent and, perhaps, buy a house in the US

Anup Nair had been looking to buy a house in Mumbai. But, perhaps, he waited too long. Now, it’s cheaper to stay on rent or to buy a house in the US instead. If and when he does decide to go ahead, he will join a growing army of Indians buying real estate in the US, making them the fourth largest pool of foreign buyers in the country.

The National Association of Realtors in its latest report has put Indians behind the Canadians, Chinese (including from Hong Kong) and Mexicans. The Britishers are at 5th spot.

The US residential real estate business was worth $928.2 billion in the year ending March 2012, of which $82.5 billion, 4.8%, came from international buyers.

And Indians account for 6% of the amount pouring in from abroad, thereby maintaining their position in the top five for another year.

“Here is where the bargains are,” said Rohit Prakash, head of American Full House, a Texas-based realty firm that focusses on  Indian buyers. 

The market in the US couldn’t be better for all-cash buyers from India as properties are struggling to beat back recession-hit prices, credit is still tight and buying remains low. The return on investment in the US, goes the argument, is higher than any what you can expect in India. Prakash said the yield in the US is between 11% and 15%.

“This can be a rewarding opportunity,” said Nair, a businessman who runs an advertising agency. With property in Mumbai, out of his reach, a US property with a high rent made more sense to him.

Realtors say that some Indians look at property in the US because of their high purchasing power.

“Indians are at the forefront globally. The sky is the limit when it comes to (their) buying power,” said Jaswant Lalwani, a Manhattan-based realtor.

And then there are those - mostly HNIs (high net-worth individuals) — who want to geographically diversify their assets, and pick up properties outside India.

Prakash said potential customers include Indians who already own property in India and are looking to hedge against a collapse of the property market there.

There are also those, who want to invest money by selling their ancestral land. “I had one client who wanted to buy agricultural land,” said the Texas-based realtor.

US laws permit foreigners to buy property, without limits. And Indian laws have made it easier with the RBI allowing Indians to take out of country up to $200,000 ( Rs. 1 crore) a year.

That’s good enough for a condo and single-family homes in Las Vegas, Atlanta, Kansas City, St Louis, Indianapolis and Central and South Florida.

You can get ambitious though, and shoot for costlier housing. A single family home in Silicon Valley, if you want bragging rights, could cost you $550,000 to $700,000.

It’s your choice.

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