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Rupee's slip buoys realty deals

UAE NRIs are potential investors owing to rupee depreciation and institutional reforms in real estate

The depreciated value of the rupee against the UAE dirham is prompting a large number of NRIs to consider investing in the Indian realty market. The new regulatory environment in India after the implementation of reforms has also revived the confidence of NRI homebuyers.
As per Anarock data, the new launch supply across the top seven Indian cities in H1 2018 has increased by nearly 10 per cent as against the corresponding period in 2017. Housing sales have also witnessed a jump of more than five per cent in the first half of 2018 as against H1 2017.
"The new regulatory environment following the implementation of game-changing policies like Rera, demonetisation and GST has created a positive outlook for the Indian real estate sector, which was earlier marred by unscrupulous practices. In fact, most NRIs today perceive that the recent regulatory changes in India have made the sector more efficient and transparent, rendering the environment conducive enough for investment in property. Furthermore, the government's initiative to boost the overall infrastructure development across the country has also prompted NRIs to turn their eyes on India. All these factors are leading to a nearly 15 to 20 per cent surge in enquiries from NRIs annually," says Anuj Puri, Chairman, Anarock Property Consultants.
NRIs can earn around 30 to 35 per cent return on real estate investments in new locations in metropolitan cities of India, such as Navi Mumbai and Powai, where infrastructure as well as residential and commercial projects are being developed fast, according to Niranjan Hiranandani, President of the National Real Estate Development Council and founder and managing director of Hiranandani Constructions.
Developers are also leveraging this resurgence in buyer sentiment by launching projects at affordable price brackets. For instance, Omkar Realtors and Developers has invited expressions of interest from NRIs for its new mixed-use township in Andheri East, Mumbai, called Omkar International District. The project has released 600 one-and-two-bedroom apartments in phase two priced from Rs9.3 million to Rs13 million.
"This is the price bracket that NRIs mostly invest in. Only the larger 2 and 3-bedroom apartments priced between Rs25 million and Rs30 million are remaining unsold," says Rahul Maroo, Senior Vice-President, Omkar Realtors and Developers.
There has been a resurgence in sentiment after Rera, GST and demonetisation. The year 2019 will be more promising for real estate, the senior executive from Omkar adds.
According to a recent study 'Indian Brands Going Global' 2018 by KPMG in India and Google, the overall NRI investment into Indian primary real estate market was estimated to be approximately $11.5 billion in 2017 and is expected to grow to approximately $25.7 billion by 2022. Approximately 20 per cent of these investments are made by NRIs in the UAE.
"With the recent depreciation in the rupee's value, the attractiveness of Indian real estate sector among the NRI community seems to have increased further with a rise in the number of enquiries. Moreover, as the festive season sets in, developers are expected to offer a number of attractive offers and discounts on real estate purchase. This along with the increased transparency in the post-reforms era will help fuel NRI investment in the Indian real estate market," said J.C. Sharma, Vice-Chairman and Managing Director, Sobha Limited.
"Today, the exchange value is benefitting buyers by approximately 10 per cent, meaning the cost of acquisition of property in India is lesser for NRIs based in the UAE. Moreover, investing in Indian properties provides them with an emotional comfort of having a home back home. With a favourable Indian real estate market scenario and backed by more spending power, NRIs are now exploring investment opportunities in projects offered by established developers," observes Naaman Atallah, CEO, Piramal Realty.
Incessant project delays and often stalled projects over the last few years had become a major pet peeve for many NRIs who earlier largely invested in off-plan properties to earn maximum RoI.
"However, more recently, Rera implementation across several states and its stringent policies towards project completion has ushered in a new wave of excitement for NRIs to consider projects that are newly-launched. More than 60 per cent of NRIs prefer to buy properties under various stages of construction instead of ready-to-move-in. This number had significantly dropped over the past few years owing to unfavourable conditions in Indian real estate," elaborates Anarock's Puri.
Smaller apartments in Mumbai offer net rental yield of three to four per cent, observe market stakeholders. NRIs generally prefer under-construction properties in India since the initial investment is less and they also offer good scope for capital appreciation.
"NRI investors are primarily looking at four factors to invest in Mumbai realty: minimum initial investment, Rera compliance, high rental yield potential and a brand which has proven delivery track record," continues Omkar Realtors' Maroo.
Indian real estate is seeing green shoots of revival in 2018. "While we may still be far away from the earlier peak levels, the positive impact of the reformatory changes, including Rera and GST, have begun to bear fruit, with the sector inching closer towards greater transparency, efficiency, accountability and financial discipline," Puri added. 
End-user comments

I would prefer to invest in Kochi since affordable properties are available in the heart of the city. Buying property in big metros such as Mumbai and Bangalore would require a big-ticket investment. Acquiring real estate in Kochi will offer good capital appreciation as well as rental returns. I am thinking of using the current favourable exchange rate to buy property in India.
- Kiran Viswam
Buying property in Indian metros is a good idea now since prices have reduced drastically. They were unaffordable earlier and upper middle-class families could only invest in satellite townships in the periphery of metropolitan cities. With the attractive exchange rate, NRIs are in an advantageous position to buy real estate in India.
- Jobby Mathews Rajan

I am looking to buy Indian real estate for the purpose of investment. With the market being stagnant, it is in favour of buyers and there are good deals to be had, both from developers and individual sellers. The recent reforms and rupee depreciation inspire confidence to commit to Indian property after years of bad news about developer defaults and project delays.
- Mithun Menon
 - deepthi@khaleejtimes.com