Dubai: Taking out loans in the UAE to retire mortgages taken on property in India might seem a no-brainer given the current exchange rate gap between the currencies. But closer inspection should disabuse you of that notion.
“Mortgages taken two to three years ago were at lower interest rates as compared to mortgage rates today — so paying them off doesn’t make commercial sense,” said Nishant Singhal, director of strategy and international operations, Investors Clinic.
“It will be more profitable to borrow now and invest in real estate in India, which is almost 25 per cent cheaper due to rupee depreciation, make capital gains by reselling and then pay off mortgages. Expats like to invest in projects which are at the launch stage rather than nearing completion, as they get longer time to pay according to progress of construction. Enquiries and sales have gone up in categories of properties which are near launch.
“Metropolises on an average have seen price increase of about 12 to 15 per cent over last 12 months. Prices in tier 2 cities have stagnated.”
Gold
It would take a lot to get expat Indians off their gold buying addiction. But, they seem to be taking a breather now, having overindulged in April and early May and with gold values still on the slippery slope.
But those with a keen eye on opportunity would have noticed the latest hike in India’s import duty on bullion — from 6 per cent to 8 — in early June. Add 1 per cent for value-added tax (VAT) and buying gold in India is suddenly a lot dearer than what it was.
“If an expat Indian heading home bought a few grams here and sold the same in India, that’s a nice differential he can pick up in the process,” said Shamlal Ahmad at Malabar Gold.
