RBI Bans Indians from Investing In Properties Abroad – What Next?

In an attempt to curb the economic slowdown due to the falling rupee, the Reserve Bank of India has put a ban on Indians from buying property overseas. This stern decision has not only affected the property market in India, but real estate markets abroad as well.

So what is the road ahead for aspiring investors?

Let's have a look:

Firstly, it is important to know that this measure comes as a part of India's strategy to minimize the outflow of foreign exchange from the nation; the consequences of which are soon to be witnessed in the real estate market of India.

It is interesting to know that apart from the surge in demand for property in India over the past few years, there has also been a significant increase in the number of overseas property transactions made by Indians. Most of these investors include NRIs operational in top-level MNCs, HNIs and businessmen who wish to maximize their ROI.

As a matter of fact, Indians have been among the top buyers of property in international real estate markets like USA and Dubai. A few of the other international destinations that attract Indian investors include Singapore, UK, Malaysia and other emerging real estate markets in the Middle East. Low rates of interest on finances and higher rentals/ROI have been the main reasons leading Indian investors to buy property abroad. Other reasons include the economic fluctuations and political uncertainty within the nation.

While it may have been a disappointment for many who were looking to buy property outside of India, and many who have partially invested in real estate overseas, nowhere does this seem like an end to the rising real estate needs. As property continues to be the most preferred investment for Indians, this decision will not end the investors' demand for property abroad; it will only channelize it towards real estate investment options within the country.

With only domestic properties left as an option to invest in, there is expected to be a significant rise in the demand for upcoming real estate markets including National Capital Region, Mumbai, Chennai, Hyderabad and Kolkata.

Already, many NRIs have started considering high-return property investments in India, where the real estate market continues to grow. At the same time, many developers have also identified this step as a good way to draw NRI investors who no longer have the option of buying property abroad.

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