Investments in Offshore Real Estate and Stocks Soar 55% to Cross $2 Billion This Year
MUMBAI: Despite the increasing difficulty in obtaining jobs or residency visas from Western countries, Indians' penchant for foreign investments continues to grow. According to Reserve Bank of India (RBI) data, investments in overseas assets such as stocks and real estate have surged, with outward flows under the Liberalised Remittance Scheme (LRS) crossing $2 billion in the first nine months of this year.
Between January and September, LRS investments in real estate grew by 80% to $350 million, while investments in equities and debt instruments increased by over 50% to $1.68 billion. Combined, these investments have crossed the $2 billion mark in the nine-month period, marking a 55% growth compared to the same period in 2024.
Wealth managers attribute this rapid shift to both structural and behavioral changes among affluent individuals. The ongoing financialization and faster wealth creation have broadened investment appetites, including a growing desire for global diversification. Additionally, the relatively weaker performance of domestic equities and the expanding access to global markets through technology have made international investing a mainstream part of many domestic investors' portfolios.
It's worth noting that most brokerages now offer investment options in overseas blue-chip companies, while many foreign countries, particularly in the Middle East and especially the UAE, have liberalized property ownership norms for foreigners. For instance, Dubai now allows 99-year freehold for residential properties.
Dubai has emerged as the standout destination for Indian investors, with proximity and familiarity being key factors in its dominance in LRS real estate flows. The city-state also offers golden visas to large investors (those making investments worth a million dirhams). Another significant driver of the jump in LRS outflows is the pursuit of education abroad by Indian students, whose tuition and living expenses are often transferred through the LRS window.
In 2024, Indian students spent around Rs 29,000 crore abroad through official channels alone. A total of 7.6 lakh Indian students went abroad in 2024, a 15% decline from the 2023 peak of 8.95 lakh students, bringing the total number of Indian students pursuing higher education in international institutions to over 1.3 million. There was a significant drop in new student numbers in Canada (41%), the UK (28%), and the US (13%) compared to 2023, while new, more affordable, and immigration-friendly destinations include Germany, France, Russia, and the UAE.
Residency-linked investment programs, such as the EB-5 visa program in the US and golden visa schemes in various countries, have also contributed to the spike in LRS outflows.
