The depreciated rupee value is prompting a large number of NRIs to invest in the Indian realty market, writes Navneet Dubey.
With rupee witnessing a major fall against the dollar in recent months, non-resident Indians (NRIs) have begun scouting for property buys in India, according to reports.
This comes after the lull witnessed in the Indian residential real estate market over the past several years, which was aggravated by demonetisation and enactment of RERA.
Added to this, NRIs were apprehensive about investing in Indian real estate despite hope for lucrative returns due to lack of transparency, safety issues and fears of sugar-coated sale propositions.
However, the trend is changing. Rajeev Jain, Director, Nirmal said that a year of RERA has hugely influenced the Indian realty industry for good. Transparency and consolidation can help the market evolve and shape the industry in a positive way.
Moreover, weakening of rupee against the dollar recently has made investments in India a lucrative opportunity. “India is a strong market for overseas investments in realty,” Jain said.
Dhaval Ajmera, Director, Ajmera Group said that around 30 % of NRIs are looking to invest in property as an asset class and the number is increasing year by year.
However, besides the rupee angle, there are several other factors that making Indian real estate attractive for NRIs. Here are some of them:
NRI’s can leverage the power of their additional income by investing in properties because prices have corrected over the past few years.
In terms of location, other than metropolitan cities and Tier-1 cities, the momentum of investment in Tier-2 and Tier-3 cities has gained pace.
“Adding to that the rate of appreciation which is much more due to fast paced infrastructural development, property investments in India could be a smart move for NRIs right now,” Ajmera said.
The returns from the property are good. Amit B Wadhwani, Managing Director, SECCPL said that many NRIs from Dubai, the United States or the Middle East are more interested in settling down in India and they are looking at locations like Karjat, Kalyan and to settle in.
“NRI’s are attracted to the commercial real estate, which is a different kind of investment, which offer good rental yields as well as capital appreciation,” he said.
The weakening rupee gives more power to other currencies and the current sluggish market enables them to buy properties at a cheaper rate in India.
The falling rupee has made it advantageous for those earning in foreign currencies and spending the same to buy property in Indian Rupees. Property buyers get more square feet of space for the same amount in foreign currency.
The new regulatory norms have brought in transparency and accountability on part of real estate developers which has resulted in a win-win situation for property buyers.