12 Oct 2013, Hindustan Times (Delhi)

The falling rupee and the current slowdown in the economy are expected to lead to an increase in NRI investments in India by almost 20% to 30% this year

Thanks to the current slowdown and the liquidity crunch in the realty market, the number of deals and enquiries from non-resident Indian investors has increased. There are more sweet deals available in the market today and foreign investors are getting more bang for their buck. However, some realty experts are of the view that many potential investors are still sitting on the fence, waiting for economic and political stability to set in.

With the appreciation of the dollar, it is believed that NRIs will be interested to invest more in India due to attractive valuations. Also, to strap the depreciating Indian rupee and curb forex outflows, the RBI has banned resident Indians from buying real estate overseas. This, according to experts, will provide for greater investments into the Indian realty market and drive up demand by 30% in three years from now.

From an NRI’s perspective, the Indian realty market stands at a 15% discount. “The market is expected to revive in the medium term, and these investors will definitely benefit by investing at present, as valuations appeal to the buyers,” points out Satish Chander Narayanan, associate director (transactions), occcupier services and investments, DTZ India.

The present economic scenario in India is a challenging one. In the past six months, the Indian currency has lost its value by almost 25%. This has proved to be a great investment opportunity for NRIs looking to invest in India, says Imtiaz Panjwani, chairman, Seer Realty, India.

“NRI investments are expected to rise further by 20% to 30%. On the flip side, some NRIs are still in the wait-and-watch mode. They are waiting for both political and economic stability to set in. There is a lot of traction in the mid segment though. Tier 2 cities are also gaining favour among NRIs,” he adds.Factors that influenceMNRIs are generally not swayed by the festive season to make property investments. They are currently looking at stability in the overall market. Usually, NRIs invest in property in India if their relatives in India are doing the same.

NRI investments in India depend on whether the housing market in the country — to which the NRI belongs — is strong or weak. If the housing market in their home country is not performing well, they would invest in the country where they are settled. According to Sam Chopra, chairman, RE/MAX India, since NRIs are currently getting more bang for their buck in India currently, they are more likely to invest here.Also, most of their investments in India are second home investments. NRIs typically consider factors such as return on investment and look for sweet deals. They invest in areas where their money is secure. Economies of scale dictate their purchase.

Since the rupee has depreciated from ` 55 to a dollar to a new benchmark of ` 61 to ` 62 to a dollar, it’s already giving NRIs a 15% break. If they take a home loan, they generally borrow at an interest rate of 2.99% to 4% from a foreign bank and that is usually taken against their first homes.In case they have surplus funds, they make a down payment for which they get a rebate of 15% either from the developer or from the secondary market. Besides, since they are bringing in ready money in a liquidity-starved realty market, they are more likely to get further discounts.

Geography dictates investments NRIs from Delhi or Punjab prefer investing in Punjab and Haryana. Their average budget is generally ` 1.2 crore. “There are as many as 27 different types of NRIs who invest in India,” points out Chopra. The type of property they invest in back home depends on whether they went as migrant labour, professionals, and so on. The categories of properties they invest in are different too. An NRI professional from the United Kingdom will buy a mid to high-end property, usually in north India, Mumbai or Gujarat.

An entrepreneur from Silicon Valley will put his money in Karnataka, Tamil Nadu or Andhra Pradesh. These investors will typically spend about ` 75 lakh to ` 1.25 crore. A Gujarati NRI will invest in Gujarat, preferably near his village. An NRI from the Middle East will invest in commercial or residential property in Kochi or Ernakulum while a professional NRI from Singapore will invest in a DLF or a Unitech project.

Of late, many NRIs now prefer property options in countries such as Turkey and Spain. There have been instances wherein NRIs have bought a 7BHK property spread across 2 acres for just about ` 2 crore.


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