Indian Realty markets gains favor for NRIs, as the Rupee continues its decline
Feb 02, 2012
 
 

For several months, India has suffered the double misfortune of a slowing economy and high inflation. Now, it is also facing a rapidly depreciating currency against the dollar. While a falling rupee is not the best news for domestic markets, it certainly provides a good opportunity for exporters and NRI investors, who stand to gain from the weakening rupee on conversion, making India an attractive destination to park any surplus funds. 

The inevitable slow-down of the Indian economy, coupled with the Foreign Institutional Investors (FII) pulling funds out of the stock-market sent the Rupee into a free fall, declining as much as 15% in 2011; in fact the rupee hit an all time low of 52.73 against the US Dollar on November 22, 2011. Additionally, real estate in other parts of the world is sinking. Volatile or flat-lining economies in the Middle East and Europe make investing in these regions risky and further make the case for a more lucrative return on investment within the Indian real estate sector.

With the rupee on the decline, Indian homes have become significantly cheaper for NRIs. For example, NRIs living in the US could receive as much as a 20% savings on their purchase price. Many from the NRI community look to invest in residential apartments that have comprehensive amenities and safety features required for a comfortable living. Some NRIs residing abroad look for opulent homes with absolute luxury; a property that can be used as a second home investment and eventually be used as a retirement home. Second home is extending good support and an attractive investment option for property buyers. This also becomes a good investment avenue, as the second home segment all over the country has been appreciated astronomically in recent times. Real estate is considered a great long-term investment, and a second home is great way to get into the action. Given this, many domestic realtors are focusing their efforts on making upcoming property development sites attractive to NRIs. 

To illustrate: TATA Housing’s recently launched The Promont, an ultra-premium residential project in Bengaluru. This project is being designed by Moshe Safdie, an internationally renowned architect who has designed world class structures such as the Marina Bay Sands in Singapore. The Promont will be equipped with all the amenities to support and maintain the lifestyle choices and preferences specific to most NRIs, with amenities like clubhouse, indoor temperature controlled pool, private gymnasium, squash court, children pool and play area. It is the most premium property executed by TATA Housing. 

With the value of the Indian rupee dropping, and the simultaneous pick-up of interest from NRI’s in domestic property investments, several banks have made it easier for NRI’s to buy property. For example, Reserve Bank has granted general permission to a few financial institutions providing housing finance to grant loans to NRIs for acquisition of residential property for self-occupation subject to certain conditions. Similarly, authorized dealers have been given permission to grant loans to NRIs for acquisition of house/flat for self-occupation on their return to India subject to certain conditions. (Source from NRI Realty News, site: http://www.nrirealtynews.com/invest-in-real-estate.php)

The inflow of NRI money will also benefit real estate companies in paying off their dues and commitment against property already purchased as their revenue will simultaneously increase. This is a good time for real estate developers to market existing and new projects to NRI community and create a win-win situation on both sides by offering attractive deals in new investments, offering schemes for higher interest benefits on early payment rebate options on existing projects that have investments from members in the NRI community.

The average investment in Indian real estate properties seems to be currently priced between Rs. 40 and 80 lakhs. However, some invest in hi end luxury properties priced between Rs.1.5 cr. and 2 cr. And a small percentage of the NRI population invests in properties above Rs. 2cr 

The Indian market has been gaining momentum with the NRI’s investing in realty sector and this upcoming trend has been mainly prominent in the Indian metros. This time will prove very fruitful for NRIs to invest in any kind of real estate as the Indian rupee value has declined.  The investment made by NRIs in Indian real estate will be a rewarding experience and would make them proud owners of their property.

 
 
 
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