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Get a piece of sunny Florida, for $1 mn
Siddharth Zarabi in New Delhi | October 22, 2007
A US resident has advertised to sell land in that country to Indians here. In the process, the seller may have started a trend of US owners turning to overseas buyers as local demand for housing dries up following the serial bankruptcies from the sub-prime mortgage, or high-risk home loan, crisis.
Leena Reddy, a US resident of Indian origin who advertised in this newspaper late last week, told Business Standard she hoped some well-heeled Indian would buy the land.
Listed at an estimated Rs 4 crore (Rs 40 million), the 0.9 acre property is apparently part of 'a prestigious golf community at Naples, Florida, with a scenic view of an 18-hole course and a lake".
In dollar terms, the price works out to $ 1 million, which Reddy described as 'a real steal' -- the cheapest home expected to cost $2 million in the area.
"We bought this lot and had plans to build a house on it. But, our plans have changed and we are now looking for buyers," she said.
Why advertise in India? Reddy said: "The real estate scene in the US is quiet. The Indian rupee has become so powerful that I thought why not?"
Reddy may be the first among a smart set of US-based NRIs who are looking at buyers from the country of their origin. A leading industrialist said he recently received e-mail offers for property in Las Vegas and Florida but trashed them for being overpriced.
The reasons for seeking Indian buyers are easy to understand. The US real estate market, battered by credit defaults, is in the throes of a major downturn, with property prices at new lows and no early prospects of a recovery.
On the other hand, the Indian rupee has appreciated by about 12 per cent against the US currency in the financial year and now stands at around 39-40 to the dollar.
In addition, recent policy changes have allowed individual Indians to remit up to $200,000 overseas -- double the previous limit -- from September 25 this year.
The move is aimed at increasing outflows in an attempt to balance huge foreign exchange inflows into India that could impact inflation.
So, a combination of cheaper US asset prices, the higher purchasing power of the rupee overseas, the increasing affluence of Indians and the freedom to invest more money overseas are factors that could work in favour of sellers like Reddy.
However, given the asking price of around $1 million, the transaction would need more than one buyer on account of Indian remittance limits.
Vivek Mehra, executive director of PricewaterhouseCoopers, said: "The limit of $200,000 (about Rs 80 lakh) is per individual per year. So, five buyers will need to come together and buy the property."
Analysts say offers to resident Indians for land and apartments overseas are not unheard of, but the number of transactions is small and confined to the UK and Dubai.
But the trend is clearly catching on. Last year, a UK-based property developer had set up shop here offering to sell agricultural land to Indians. The plot sizes were small and prices were tailored to the remittance limit prevailing then.