Realty players target NRI buyers
By Tarun Nangia - NEW DELHI
Published: 21st Jul 2013 07:29:59 AM
The sharp decline in the rupee vis-à-vis the dollar as well as the slowdown in the domestic market is making Indian developers go selling their residential and commercial products to NRIs in the UK, US and Middle East.
“Ever since the rupee has depreciated, we have been receiving a steady response from NRI customers from UAE, Singapore, UK and the US. The demand from the NRI segment has increased by 25 to 30 per cent in the past few months,” says Brotin Banerjee, MD and CEO, Tata Housing. The 25 per cent fall of the rupee against the greenback in the past two years has resulted in the price of real estate falling by a corresponding 25 per cent in notional terms, assuming that the NRIs are paying in dollars. “If a residential unit was available for Rs 1 crore before the slide of the rupee, the same is now available for Rs 75 lakh for NRIs,” adds Banerjee.
To cash in on the trend, HDFC organised an Indian Homes Fair at the Hilton London Metropole Hotel on July 13 and 14. The target was Indians living in the UK, who have the highest rate of home ownership among immigrants. The median household wealth of this community is £229,000, which is a reflection of their passion for buying and investing in property, according to HDFC.
Leading Indian property developers like AnsalAPI, Tata housing, Mahindra Lifespaces, AdaniM2K participated in the event. HDFC now plans to organise similar exhibitions in the Middle East and Singapore.
“We know this is the best time for the diaspora to invest in India, and HDFC is happy to provide this opportunity to answer the many questions that people are asking,” says HDFC managing director Renu Sud Karnad. “There is increased demand for residential property in India and the unrivalled infrastructure in the expanding industrial towns is even better than in some of India’s major cities.”
The Delhi-National Capital Region, Bangalore, Chennai, Coimbatore, Goa, Gujarat, Hyderabad, Jaipur, Kochi, Kolkata, Mumbai, Pune and Punjab are being pitched as the most attractive buys for NRIs.
Samir Sahni, general manager, sales and marketing, AsalAPI, who was present at the HDFC London fair, says: “As UK houses a major chunk of NRIs, we are expecting a reasonably good response from the fair. This time around, there was an encouraging number of inquiries focusing on Delhi-NCR.”
Sahni believes the present environment is very lucrative for overseas investors. It offers them an opportunity to get maximum returns by investing a small sum through subvention scheme wherein a buyer has to pay just 15 to 20 per cent on booking and rest is payable on or after possession as the EMI starts only after possession is offered. With the Indian rupee depreciating, “NRIs are in a better position to en-cash and may get an extra return or discount of 15-20 per cent just because of rupee depreciation,” he adds.
Parsvnath Group chairman Pradeep Jain says the fact that property prices have witnessed a 42 per cent jump in the last four years has increased demand from NRIs. “The sharp depreciation in rupee value in comparison to the dollar, pound and other global currencies in the last one year has rejuvenated the Indian real estate market, which saw a fall in global demand after the economic crisis of 2008.”
Tata Housing’s Banerjee says demand has also been triggered by the rise in the number of senior NRIs returning to retire in India after having spent their professional lives abroad. This is especially true in cities like Bangalore, where investment in real estate has seen a rising demand from NRIs in the retirement homes segment. The easing of policy regulations by the Reserve Bank of India and financial institutions is a large driver of this demand.
Smeeta Neogi, VP, marketing, Mahindra Lifespaces says the Indian real estate market has always given lucrative returns to investors, with most locations witnessing a growth of 40-60 per cent over the last three years. Taking about how the rupee depreciation has increased NRI interest, Neogi says: “If we consider the May and June 2013 period, the rupee has depreciated by over 12 per cent against the US dollar. Assuming a conservative return of 10 per cent from an investment in Indian real estate in the short-term, the investor could expect returns of over 20 percent as opposed to an investment made in the pre- May period. With such odds in terms of numbers as well as the plethora of investment opportunities presented by reputed builders across markets, we believe the market will witness an inflow of capital from the NRI community.”
- Sunday Standard