Chennai: If you had invested in equities in Denmark, New Zealand or the US in early 2010, you would have enjoyed returns of about 100 per cent or more by now. So, when the Reserve Bank of India on Tuesday effectively allowed individuals to buy assets overseas for up to $250,000 a year (about Rs 1.5 crore in current prices), the investment choice would have seemed obvious.
In reality, the really moneyed Indian's obvious immediate investment destination now will be: India.
True, as an S&P Dow Jones Indices report of Jan. 30 indicates, equities in developed countries outperformed those in emerging markets (roughly 72 per cent to 19 per cent). But in the last one year, Indian equities have topped all others with over 50 per cent returns.
Anil Rego, CEO of investment management company Right Horizons, said the decision of the central bank augurs well for the long run, making it possible for investors to diversify their investments across countries. “It helps manage risk very well,” he said. But, in the short run, he said, “India’s doing well.”
A similar sentiment prevails in the real estate industry. Anuj Puri, Chairman and Country Head of real estate management firm JLL India, said, “The current signals strongly favour investment into Indian real estate, so we are not going to see an exuberant flight of capital to foreign shores. Quite the contrary, in fact.”
He said, “The right question to ask would be not ‘which foreign cities compare with Indian cities for real estate investment’, but ‘does investing in foreign markets provide a good rationale to Indians who have ample opportunity to grow their investments in their own country’.”
High net-worth Indians have traditionally preferred purchasing properties in London, Singapore, Dubai, as well as in some US cities.
“The current signals strongly favour investment into Indian real estate, so we are not going to see an exuberant flight of capital.”