There is a growing number of Indo-Canadians who are snapping up luxury
residential properties in India. Some are flipping the homes for steep
profits or using them as vacation residences. Others are treating them
as lucrative rental properties. Non-resident Indians in the United States,
United Kingdom and Middle East are also fuelling the trend which has
arisen in the wake of legislative changes that have made it easier for
so-called NRIs to buy property, but is not without controversy. Critics
say this infusion of foreign cash has driven up the cost of housing,
pricing some locals out of India's booming real-estate market which
has been growing at an average rate of 30 per cent over the last two
years. Some estimates peg its worth at about $15 billion (U.S.). Indian
property developers are now allocating between 10 and 15 per cent of
their inventories to NRIs and are aggressively wooing them from around
the globe. Developers say the total NRI market is already worth between
$5 billion and $10 billion with the top hot spots being Mumbai and New
Delhi. Indo-Canadians - many of whom are Punjabi - are also showing
a preference for more northern locales. Property companies are eager
to tap the Indo-Canadian market because India is Canada's second-largest
source for new immigrants.
Legislative changes in India have also streamlined the buying process.
Not only has the government revamped the rules for foreign direct investment,
it is offering expatriates more advantages .It introduced a "Person
of Indian Origin Card" in 1999 and tweaked the program in 2002.
The card gives former Indian citizens, along with eligible spouses and
children, increased protections and rights. The PIO cardholders do not
require a visa to enter the country or permission to work there. While
there are still restrictions on acquiring agricultural land, residential
properties are fair game. The Consulate General of India in Toronto
has issued about 9,000 PIO cards to date, but Canada-wide figures are
not available .PIO cards have helped Indian banks operating here arrange
home financing loans. The State Bank of India - which has a Canadian
subsidiary - says it is seeing a double-digit year-over-year increase
in demand for its NRI home loan product.
That buying power has left groups like The Confederation of Real Estate
Developers Association of India and the Maharashtra Chamber of Housing
Industries salivating over potential profits. Both teamed up with the
CineMaya Media Group Inc. to host the recent "Buy Indian Properties
Expo 2008" in Toronto. Not all Indians, however, are applauding
the infusion of foreign capital. "With investors across markets
snooping around for new assets, Indian properties became the red hot
blue chip... it has certainly priced out genuine home buyers from the
market," The Economic Times argued in an opinion piece.
