Property Analysis: An invitation to India

No stranger to British visitors, India, itself something of a riddle to a western mind, is riddled with reminders of British rule. But no matter how hard the mighty Empire tried to put an indelible stamp on the country, India continued to live at its own pace, and its beautiful beaches put the subcontinent firmly on the British tourist map in the 1960s. However, the times they are a-changing again, and the tiny state of Goa, halfway down India’s west coast, is moving on. A hippy hangout in the 1960s before its flower power suffered a severe dip, Goa is now moving upmarket as some of the world’s luxury hotel chains move in, and there’s even a golf course on the way – as are more flights.

An Open Skies policy signed by the British and Indian governments will lead to 40 more weekly flights (there are currently 16), perfect for those hoping to rent out their Goan bolthole. A new airport, to be built at Candolim, is also just over the horizon, although in typically mystifying Indian fashion it’s not clear exactly when the airport will be ready. “It’s India, so you never know”, shrugs Nick Gregor from Aguada Management, who predicts that Goa is “like Florida or Spain 15–20 years ago: a property hotspot in the making”. Such hazy details are part of Goa’s charm, where cows still wander down the streets and things don’t run like clockwork – no bad thing when you’re trying to get away from it all. Moreover, building regulations are expected to keep developments at least 500 metres away from the beaches and no higher than a palm tree, and there’ll be no such thing as private beaches, so the state can retain its charms: a tropical coastline, a gorgeous climate, colonial Portuguese architecture, swaying palm trees and a patchwork of rice paddies for that added touch of exoticism. “Goa isn’t about to become a carbon copy of the worst excesses of Spain or even Thailand for that matter”, says Gregor. “On top of this, there isn’t that much land available to build on as up to 15 people could own a piece of land – and not all of them will agree to sell it.”

Not that this has stopped Aguada finding enough land to build 100 three-bedroom, three-bathroom villas with air-conditioning, marble floors and teak surfaces for £112,000.

Alternatively, Harlequin is now marketing a selection of off-plan properties at Candolim Meadows, which are due for completion. Prices start from £19,750 for a studio apartment and increase to £106,250 for a three-bedroom detached villa with private gardens. The development will also feature a swimming pool, restaurants and other facilities. Both Gregor and Ames believe that capital appreciation will be strong over the next few years. Gregor feels that Goa’s “capital appreciation could top 30 per cent in the next five years”, while Ames is even more bullish and feels that India is “at the start of a cycle of dramatic growth”. As a result, “investors are likely to see high levels of capital growth, with conservative estimates starting at 15 per cent per annum.”

However, foreigners are currently unable to take money out of the country, including monies made through a property transaction, but, suggest Gregor, “you could sell to a Brit and hand the money over in the UK”. There are also plans to introduce a 3.5 per cent property tax, but that is yet to be implemented and exactly when it happens is anyone’s guess. Furthermore, issues surround foreigners owning property freehold, but all reputable agents and developers operating in Goa have their own legal sidesteps for such problems. So, isn’t it time you started sidestepping Auntie Maureen by planning your own exotic escape?

Another option for those eyeing an exotic getaway is Sri Lanka. Like India, Sri Lanka also had close ties with the British Empire, when it was known as ‘Ceylon’, but is yet to feature as a fixture on the itineraries of modern British travellers. Beautiful and boasting a bewildering variety of scenic highlights, Sri Lanka certainly has the natural resources to make a real mark on the international tourist trail, but political instability has prevented it establishing much more than a toehold in the minds of those would be visitors. There are also barriers blocking the path of property pioneers, too. “One of the main reasons that has put people off buying in Sri Lanka is that there is a 100 per cent tax paid on any foreigners buying land/property”, says David Ames of Harlequin Properties.

However, property agents and developers are nothing if not tenacious in seeking out land for development, then ironing out any legal creases to make buying property that little bit smoother. In Sri Lanka’s case, the solution comes in the form of a five-star hotel in Sigiriya, the building of which has been approved by the Sri Lanka Board of Investment – a fact that handily cuts through the taxation strings at a snip.

Sigiriya lies some 157 kilometres north of the capital, Colombo. It is famous for its gardens and immense, Uluru-like rock. Ames describes Sigiriya as “one of the most popular tourist attractions in Sri Lanka”, and hopes that the Palace Hotel will put it even more firmly on the map.

The hotel is being built on a 12-acre site 500 metres from Sigiriya Rock and Ames believes the investment opportunity would ideally suit the “lazy investor”. Based on an 80 per cent occupancy rate, a rental return of 11.5 per cent per annum is predicted, all of which will be tax free for a minimum of five years. Prices start from £44,705 for a basic room, but the King Villa, which offers views over the Lake, pool and gardens, comes with a less modest price tag of £145,294.