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Crumbling rupee is building opportunity for NRIs

R. Balaji | Updated on August 29, 2013 Published on August 29, 2013

BL29_SBR_REALESTATE

Developers expect 35% jump in enquiries from expatriates

With the rupee value continuing to slide, investing in real estate in India has become increasingly attractive for non-resident Indians.

But with the overall sentiments down, investors are cautious while first-time home buyers find it attractive and are more likely to make that down payment, say real estate experts.

Consider getting Rs 50 for a US dollar a few months back to Rs 65 now – that is a more than 20 per cent benefit straightaway, points out Joseph Ittiachen a real estate consultant.

NRIs, particularly the first-time home buyers, see multiple advantages — the foreign exchange value is now to their advantage, they get home loans overseas, people in the Gulf pay 2-3 per cent on home loans and invest in property here and with money on the table, they bargain hard and get a better deal from developers who are certainly seeing a drop in bookings in recent months, he says.

These factors have been the basis of property transactions that “I personally know of by buyers based in the Gulf countries,” he said.

First-time buyer

However, investors, those buying a second or third property, are a lot more cautious. They are not willing to commit the funds because the overall sentiment is down. A first-time home buyer, to whom it is a necessary and inevitable investment, this seems to be an ideal time, he said.

A senior executive in a housing finance institution said markets such asChennai where the end user segment is significant, will benefit. But markets where investors play a dominant role may not see as much increase, feel developers. Investors with cash are holding on to the money – they may bring funds into the domestic market but prefer liquidity to investments in immovable property.

National Housing Bank quarterly residential index data show that Hyderabad and Chennai values have stagnated over the last one year. Bangalore has shown some increase. Now would be an ideal time for buyers to invest in housing, the executive said.

Ganesh Vasudevan of IndiaProperty.com, a real estate portal, said buyer interest is certainly on the increase as reflected in enquiries. But actual transactions are yet to happen. Possibly, the festival season towards the year-end will see some of this interest translating into actual purchases. The US, which is the main reservoir of NRIs, is itself witnessing a recovery and people are also focused on investing over there.

Sanjay Chugh of Skylines Property, a real estate consultant, says that with a further slide in rupee anticipated, investors and buyers are bringing in funds but are holding on to the cash. Enquiries are on the increase but actual transactions could take some time till some clarity in trends is seen.

A recent report by the Assocham says the rupee’s sharp dip against the US dollar has made it attractive for NRIs to buy property and developers are anticipating a 35 per cent increase in business enquiries from the expatriates this year.

The Assocham paper on “Falling rupee sparks property boom from NRIs” highlights that Bangalore is the most favourite property investment destination for NRIs followed by Chennai, Mumbai, Ahmedabad and Dehradun.

A lot of Punjabis settled in Canada and the UK are expected to invest more in Chandigarh suburbs like Dera Basi, Mohali and Panchukla. This time, there is a lower demand for the Delhi-NCR market, adds the survey.

The report is based on a random survey of nearly 1250 real estate developers in these markets.

NRI traffic

The majority of real estate developers saidthe NRI traffic is coming primarily from the UAE/Gulf region, the US, Singapore, Australia, the UK, Canada and SouthAfrica. The demand is more for high end properties and commercial buildings.

As per the recent estimates, nearly five million Indian expatriates live in the six Gulf Co-operation Council (GCC) countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE, and they remit close to $30 billion to India every year.

The Indian developers are optimistic and expecting to get a good number of booking this year.

Their confidence is based on the fact that the rupee is plunging and has fallen 35 per cent in the last one year, adds the survey.

Overall, NRI interest has perked up but the feeling is that it is yet to manifest in growth in purchases.

Published on August 29, 2013
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