‘Need help with taxes, rules to invest in the US’
It is common knowledge that Indians are inclined towards investing inland. With the property sector experiencing as lowdown in India over the last couple of years, a growing number of Indians are looking towards the West for stable investments in the US real-estate market.
Indians love to own real-estate, which is capital intensive and can be liquified easily.
The same capital can be invested in liquid, credible and mature investment opportunities in the US at attractive yields. COMMERCIAL REAL-ESTATE INTHEUS The US Commercial Real Estate (C RE) industry is worth $6.75 trillion, approximately. This works out to be more than 25% of global commercial real-state industry, which is approximately $26.6 trillion( not including Africa ).
India emerged as the fifth- largest investor in US real-estate, by purchasing property worth $ 7.8 billion in the period between April 2016 and March 2017.
The US CRE industry differs from the Indian C RE Industry in the following ways: Defined entitlement and permits: This is a require-
ment from project lenders before construction. It has helped to ensure that there is no delay in project delivery.
No title dispute: Landownership in the US is only 300 years old and can be protected by title insurance.
Known exit strategy: A broad and efficient CRE market with large institutional players and publicly traded real-esatate investment trusts( RE IT) provide stable exits. Cash-flow generation guides property evaluation: Credit quality of building tenants, along with long-term leases, provide stable valuation.
The advantage soft he USC RE market vis-à-vis ownershipdriven private transactions in India are as follows:
1. REITs primarily scout for stable cash-flowing real-estate transactions which generate yields for their investors.
This ensures liquidity for a developer completing quality cash-flowing C RE projects in US, vis-à-vis exits dependent on an Ultra High Net Worth Individual’s liquidity (UNHI) real-estate investor in India ( prevalent in secondary sale).
2. Since most REITS are listed entities andpublicly traded,buying and selling from them and to them adds a layer of authenticity.
This also reduces instances of fraudulent transactions, which are rare in the US.
IndianCRE investments offer yields in the range of 8% to 11% per annum in Indian rupees, which works out to roughly 3-6% per annum, inflation-adjusted real returns.
On the other hand, US CRE investments offer yields between 8% and 12% per annum, in US dollars, which works out tobe a real return in the range of 6% and 10%.