Globalscape
Globalscape
I
nvesting in Indian properties always
provides non-resident Indians
(NRIs) with an emotional comfort of
having a home back home. But the
reduced rate of capital appreciation and
market slowdown for the last few years
had not been in line with NRI investors’
expectations. Of late, the regulatory
changes in India have made the realty
sector more efficient and transparent,
rendering the environment conducive
enough for their investment in the coun-
try. Moreover, the depreciating rupee
value in recent times being the icing on
the cake has prompted a large number
of NRIs to invest in the Indian realty
market.“Post demonetisation and RERA,
Indian real estate market had become the
sought-after investment destination for
NRIs and now with the weakening of the
rupee, the offer becomes more lucrative,”
says Ashish Arora, director, Viridian Red.
According to real estate stakeholders,
after the rupee slumped to its historic
low of 72.92 per dollar, there was a sud-
den increase in inquiries of properties
in India by NRIs. “In order to get a good
return, NRIs are willing to invest in the
Indian real estate market especially in the
metro cities,” says Rajan Dang, founder,
Zvesta.com, an AI technology-based re-
alty solutions provider.The reason behind
this spurt in demand is a weak rupee and
he believes that it will definitely give NRIs
further 10-15 per cent leverage. “This
together brings them a straightaway
average profit of 25 per cent of bookings
According to real
estate stakehold-
ers, after the rupee
slumped to its historic
low of 72.92 per dollar,
there was a sudden
increase in inquiries
of properties in India
by NRI s .
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properties in India,” adds Dang. Also
says Dr.NiranjanHiranandani, national
president, NAREDCO, “Buying property in
India has turned more attractive because
NRI property buyers get more square feet
of space for the same amount in foreign
currency.”
As ChavviiPrabhakar, CEO and co-
founder, Global Indian Solutions updates
that there are over 30 million global
Indians across the world, making them
one of the largest diaspora populations.
“They also contribute to over US$ 900 bil-
lion in assets under management (AUM)
in India with real estate being a preferred
asset class due to inherited properties,”
informs Prabhakar.
As Soumya Das, director, RIPL (Rudrab-
hishekInfosystemPvt. Ltd.) enlightens
that the Indian rupee is the worst
performer in the major emerging market
currencies in 2018. “The rupee has lost
nearly 3 per cent of its value since the
start of 2018, and it is the second-biggest
loser in the BRICS group: Brazil, Russia,
India, China, and South Africa. The Rus-
sian ruble is the only currency that has
lost more value than the rupee in 2018
so far,” says Das, adding, “The fall being
attributed to higher crude oil prices,
widening trade deficit and higher capital
outflows.”
Rupee has reached a new low and
the market trends and analysis suggest
better return for investment. In any real
estate investment, there are two types
of returns – rentals and capital apprecia-
tion. According to a survey conducted last
year, rentals for commercial properties in
India was estimated to be about 5.5 per
cent of the property value, however, for
residential, it is assumed to be about 1
- 1.8 per cent of the property value. Capi-
tal appreciation is dependent on multiple
factors, primarily being the demand. So,
the higher the demand, the higher will
be the capital appreciation. “The demand
is generated by few factors, top of them
being location, the kind of property you
are working with, the services which are
being provided and who your neighbours
are,” adds Arora. In that aspect, if we look
at it, the capital appreciation tends to be
more in commercial property viz-a-viz a
residential property.
If the rupee strengthens, as AnujPuri,
chairman, Anarock Property Consul-
tants assumes,the impact on real estate
demand would depend on by how much
it has strengthened. “Given the current
trends, it is unlikely that it will strength-
en enough to kill NRI investor appetite,”
says Puri, adding, “If the rupee were to
hypothetically strengthen to a sufficient
degree, it could result in NRI inves-
tors considering other countries where
their currency still gives them a greater
advantage. However, end-user NRIs will
obviously only look at India for buying
a home in anticipation of their eventual
return.
In addition to the differential amount
due to current dollar-rupee dynamics
is making real estate investment even
more attractive for NRIs with commercial
real estate offering better and assured
returns making it too good a deal to miss.
“Commercial realty, both retail and office
spaces, are preferred as they require
lesser maintenance than residential,”
avers Raj Singhal, CEO, Elan Group.
Apart from the depreciated rupee
value, some realtors think there are
many other motivating factors for NRIs
to consider investing in the Indian realty
market. “Apart from the implementation
of reforms like RERA &GST which has
given enough confidence to the NRIs to
buy properties in India, NRIs are also
exploring investment opportunities
in projects by the brands with proven
and timely delivery track record,” says
AvneeshSood, director, Eros Group. Also
says AnkitKansal, founder and MD, 360
Realtors, “A dwindling rupee in conjunc-
tion with growing preference for smaller
ticket size is adding a lot of velocity in real
estate transactions, as this has resulted in
significant reduction in barriers to entry.”
(Courtesy: Kausar Firdausi, Mail Today)
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