The realty sector in India is cooling off and the stock markets are also not at their best behaviour. So what does one with a lot of surplus or “disposable” income do? Where to invest? Going by the latest data churned out by RBI, looks like Indians are heading abroad. No, not visiting, that is anyway happening but Indians are now even investing abroad – in property and equity/debt instruments. RBI data shows that of remittances, the amount spent in acquiring property abroad, rose from $0.5 million in FY05 to $39.5 million in FY08, a 78 times rise! Investment in overseas debt and equity went up seven-fold from $20.7 million in FY07 to $144.7 in FY08. Remittances in the form of gifts to relatives increased almost 10-fold to $70.3 million in FY08 from $7.4 million in FY07.
Most of the money is going to emerging markets, mainly Brazil and Russia which offer attractive returns. And investors have just started feeling the waters in USA. Big time property buying is happening mainly in Dubai which is on a major growth trajectory, especially in real estate. There is also some interest in Malaysia and the UK.
And how come Indian’s are gifting to their relatives abroad? Have they all of a sudden become more generous and have realised the pleasures of giving without having expectations of any returns? No way! The money which they are sending back to the relatives abroad is the returns on investments which these relatives have made in India, mainly in stocks and realty. NRIs investing in India and Indians investing abroad, indeed an interesting trend seems to be emerging! Each feeling that the grass is greener on the other side.