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In the country’s real estate sector, with the rupee depreciating by 12-15 per cent in recent months against the dollar, there is more bang for the buck now.
While the non-resident Indian (NRI) community is scouting for residential projects, institutional investors like Blackstone, GIC, Brookfield, and Ascendas among others have been acquiring commercial properties across metros and major cities of the country.
2013 pattern
Interaction with some of the sector experts shows that somewhat similar pattern was witnessed in 2013 when the rupee had depreciated and now in 2018, significantly both happening a year ahead of the general elections.
Ashish Agarwal, Senior Director, Valuation and Advisory Services, Colliers International Ltd, said, “In the past couple of years, there has been no capital appreciation in the real estate in most markets in the country. Many moved away from realty as an investment opportunity as the returns have been too low at 2-3 per cent when it comes to residential.”
“'However, after the reforms initiated in the real estate sector, including RERA and the positive impact of GST would be felt in the long run. The drop in rupee versus dollar by about 12 per cent, has been a big investment opportunity for the institutional investors and individual buyers too,” Agarwal said.
“While real estate is also sentiment-driven, the current enquiries show that there has been heightened interest. But the sales are bigger in the commercial segment,” he said.
Explaining the implication of the falling rupee, Arvind Nandan, Executive Director, Research, Knight Frank India, “While this is concern for the economy, for NRIs it augurs well. How this has actually translated into sales is difficult to come to a conclusion as there is no hard data on sales.”
“The situation is somewhat similar to what was experienced in 2013, when rupee depreciated and dollar strengthened. And that time too it was a year ahead of elections. However, the difference now is, India is far more attractive for investment now having taken a number of reforms. However, the conventional wisdom in reality is that commercial properties appreciate and yield better results. This has spurred sales in the commercial segment.”
NRI interest
Abhinav Joshi, Head of Research, CBRE India, said, “We are seeing a lot of interest from NRIs and whether this translates into sales is to be seen. The depreciating rupee and ongoing reforms offer immense scope for investment. The push toward transparency too has added to the attractiveness.”
“From an institutional perspective, there has been growing investment in the commercial realty. REITs too offer a great opportunity. This will all translate into higher capital flows into the country,” he said.
Anuj Puri, Chairman, Anarock Property Consultants, said, “The depreciation of the rupee against the dollar is prompting a large number of NRIs to invest in the country’s realty market. Builders are also luring them with a host of amenities and features.”
“The recent regulatory changes have made the sector more efficient and transparent, rendering the environment conducive enough for investment in property. It has revived the confidence of both domestic and NRI homebuyers.”
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