With real estate growth reaching its nadir in India owing to sluggish economic condition and realtors finding it difficult to launch new projects due to liquidity crunch and piling of inventory, the Non Resident Indians (NRIs) and High Net Worth Individuals have come as a saviour for most of the leading builders, so to say.
There is no doubt that real estate prices have moderated in the last two years and in some cities it has even gone down to 20-30 per cent in 2014 compared to last year, the Indian Diaspora in UAE, UK, US, and also in South Africa, Malaysia, Singapore and Australia, are making beeline to invest in housing and commercial properties in their homeland, with villas and estate properties leading the chart.
‘We are regularly participating in property exhibitions in Dubai, Abu Dhabi, Kuwait, and other Gulf states to reach out to Indians there who are interested in investing in properties back home. We are even having camp officess in the US and UK to sell our projects to prospective NRI clients. We are planning to launch our offices in South Africa too, as the region is gaining momentum with more number of High Net Worth Individuals (HNIs) are showing interest in investing in high-end properties in India. In Gulf region, we primarily target south Indians belong to Kerala, Bangalore, Chennai or Hyderabad,” says
Piyush J Bhatt, Senior Sales Manager, Arihant.
NRIs generally prefer to park their money in real estate properties in Mumbai, Bangalore, Chennai, Ahemedabad, Goa, Mohali, Kolkata, Pune apart from a few prominent cities in Kerala like Kochi, Thiruvanandapuram, Alapuzha, Kozhikode, etc.
According to a survey conducted by Sumansa Exhibitions, organisers of the Indian Property Show in Dubai, Mumbai still tops the list of favoured property investment destinations for UAE-based Indians.
The study found that 31.9 per cent of the respondents picked Mumbai as their top city for property investment, while Bangalore came second with 24.4 per cent preferring to invest in residential property in the coming months. Chennai and Pune shared the third spot, followed by Delhi, Cochin, Navi Mumbai, Gurgaon and Hyderabad, the survey noted.
“Sector experts predict that residential property in Bangalore and Chennai will remain a good bet for 2014, too. Bangalore is the third-largest real estate investment hub for High Net worth Individuals (HNIs) and tops the list in terms of investments from NRIs looking at settling down in India in future. With a HNIs population of about 10,000 — the third highest in the country after Delhi and Mumbai — Bangalore’s super-luxury segment is worth watching,” said
Sunil Jaiswal, CEO Sumansa Exhibitions.
According to the survey, 16 per cent of the respondents were looking for high-end properties priced above one crore, 31 per cent were seeking properties in the price range of over Rs 76 lakh, while the majority – 52.6 per cent – were focused on the mid-segment range of Rs 26-75 lakh rupees.
The survey also found that around 77 per cent of the NRIs were interested in buying residential apartments, with 72 per cent of the buyers aiming to make the purchase within the next six months. Most of the buyers, at 67 per cent, were within the age group of 36 to 50 years.
Leading property consultancy firm Jones Lang LasSalle (JLL) India, says that India’s real estate sector receives significant investment from NRIs, with the amount reaching over $2 billion in 2013. The figure indicated a growth of 35 per cent compared to 2012, and accounted for almost 12 per cent of total apartment sales in the top seven cities.
As per a recent estimate, nearly five million Indian expatriates are living in six Gulf Co-operation Council (GCC) countries of Oman, Saudi Arabia, Qatar, Bahrain, Kuwait and the UAE and they remit close to 30 billion USD to India every year.
Cautious approach
Due to steady growth of Indian real estate and also decreasing value of rupee against international currencies, NRI investments in Indian real estate, both commercial and residential sectors, has seen a jump in the last few years.
Sentimentally, the Indian expatriates are attached to their homeland and they also feel secured when they invest their money in the booming real estate back home. Some even park their money in gold, government bonds and securities, but majority of them, particularly from UAE, the UK and the US are predominantly see real estate is the best option for short and long term investment.
However, there has been a cautious approach by NRIs in the recent months in buying properties back home due to new change of guard at the government level, feel many builders.
“There has been a lull in new property launches across India since 2013 due to impending general elections. Normally it has been a practice that one year before elections, developers avoid launching projects as it generally takes 18-36 months to get all statutory approvals from various State and Central government departments. There is a possibility that the builders may end up paying twice for getting the project approvals, because when the new government sets in, they have to apply for the approvals again, thereby incurring expenses twice. So, builders generally postpone the projects till six months after polls. Since there are less number of projects available, NRI investments would be less during this period,” opines
R Rajendran, Senior Deputy Manger-sales, Rajkham Builders.
NRIs in Chennai Realty
As far as Chennai real estate is concerned, NRIs prefer to invest in properties in and around OMR, ECR, Porur, Valachery, Chrompet, Tambaram West, Oragadam and Sriperumbudur. Those who look for high-end properties within central business district are looking at places like Adyar, Thiruvanmiyur, Mylapore, Besant Nagar, Anna Nagar, etc where property prices are very high and only premium builders are offering homes on invitations only.
“We are getting enquiries mainly for properties around OMR, ECR, Porur and nearby areas. According to me, GST and adjoining areas are less preferred by them as it has low return on investment. Even Oragadam and Sriperumbudur, which are the hot destinations among local realty enthusiasts, haven’t found many takers from NRI community,” says
Sudarshan, Senior Sales Manager, BBCL.
Most of the NRI investors prefer high-end properties valued about one crore with world- class amenities. PS Shiv Shankar, an NRI lives in Dubai and has a base in Chennai, says, “If I am investing in a property in India, my choice will primarily depend on the location of the property. If it is a city like Bangalore or Chennai, which are not as crowded as Mumbai or Delhi, I would ideally look for villa, with maybe five to six bedrooms, in a relatively quiet area within easy driving distance of the city. I would want greenery as I enjoy gardenining, and my villa should come with a small gym and private, covered swimming pool. Privacy is very important to me, so that is something I would definitely look for and I would love a Jacuzzi in my bathroom,”
Interestingly, a recent survey conducted by associated chamber of commerce and industry of India (ASSOCHAM) across major cities in India, revealed that developers have found an easy escape route from the present cash crunch and see NRIs as their saviors.
The industry body has conducted a random study involving 1250 real estate developers in Dera Basi, Delhi-NCR, Mumbai, Mohali, Kolkata, Hyderabad, Chennai, Bangalore, Pune, Ahemdabad, Dehradun etc. Most of the developers have revealed that NRIs have been showing renewed interest especially after the rupee hit the record low since they would get good exchange rates for their currency.
The ASSOCHAM study also found that NRIs prefer Bangalore as the most suitable city to park their funds in real estate properties, which include residential and commercial establishments. After Bangalore, NRIs prefer Chennai, Mumbai, Ahemdabad and Dehradun.
Punjabis settled in UK and Canada are showing more interest in investing in upcoming real estate spots around Chandigarh like Mohali, Dera Basi, Zirakhpur and Panchukla. Surprisingly, India’s hottest real estate destinations like Delhi-NCR and Mumbai markets did not figure in their ‘most preferred’ investment destinations list.
“The depreciation of rupee value which began one months ago and have moderated now, has increased the enquiries from NRIs considerably and we are expecting a surge of business up to 35 per cent in this adverse market condition. The decline in rupee, though affected the domestic market due to macro-economic conditions, sales have increased due to NRIs because they want to get value for their money,” said a majority of developers.
Though for non-resident Indians, this is the best time to buy properties in India, the time is not good for people back home. As per market estimate, an NRI who buys a home can save up to 30 per cent on his property value and can expect good percentage of return on investment, opines DS Rawat, Secretary General of ASSOCHAM.
According to the survey, majority of the NRI traffic is coming from the US, UK, UAE/Gulf region, Singapore, UK, Canada, Australia, South-Africa etc and the demand is more for commercial buildings and high-end properties like villas and single floor luxury apartments.
K Ramanathan
