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NRIs eye Indian property market as a safe bet

GCC-based NRIs are investing heavily in the Indian property market with the rupee now expected to touch Rs20 against UAE currency. India is increasingly perceived as a safe haven for Indian expatriates.

A fluctuating rupee, and introduction of various regulations to bring in transparency and accountability, are making real estate more lucrative for NRIs, experts say.

Rupee is hovering near 73 against the US dollar since the past one week. "The drop in rupee can be seen as an investment opportunity for individual buyers as well as institutional investors. Over the past few months we have witnessed a lot of interest from NRIs. This trend continues to grow stronger due to the timely reforms introduced that brought transparency and accountability in the sector," said Anshuman Magazine, CBRE Chairman, India, Southeast Asia, Middle East and Africa.

With the real estate industry estimated at about Rs3 trillion annually, about seven to eight per cent of the inventory is being bought and held by NRIs each year.
"This amounts to about Rs21,000-30,000 crore of annual purchases by NRIs each year. Due to weaker rupee, a 10 per cent depreciation allows NRIs to enter at a 10 per cent discount compared to the domestic resident counter parts," Nisus Finance Managing Director and CEO Amit Goenka added.

Given the current trend of inquiries and purchases in the last two-three months, it is being estimated that this consumption will rise to about 10-12 per cent. "Hence three to five per cent increase in NRI consumption of residential and commercial inventory will further boost project sales and suck up significant unsold inventory," Goenka maintained.

According to Naredco national president Niranjan Hiranandani, for NRIs, this situation (rupee fall) is a déjà vu of sorts as it is the same as the scenario the country witnessed in 2012.
"Home buying is regaining traction and RERA has made it better and in a situation where property prices at primary level are down by 10-15 per cent, and the currency valuation adds another 10-15 per cent, it definitely is a scenario where the NRI buyer is back," he added.

Property portal Zvesta.com's founder Rajat Dang seconded that, saying fall in the rupee will definitely boost the demand of properties in India and NRIs are willing to invest in realty market especially in the metro cities to get good returns.
"Online property aggregators are also getting much benefit through this with their increase in traffic numbers from day to day. NRIs are easily searching for the best properties in India with having a golden opportunity to buy it at an affordable price," he added.

Omkar Realtors, which is marketing its recently launched integrated realty project 'Sereno OID' in Andheri in the suburban Mumbai in both domestic and global markets, has received almost 100 bookings from NRIs, which is 20 per cent of total inventory, averaging a total cost of Rs125 crore, into its project.
"For NRIs, depreciating Indian rupee seems to be encouraging further investments back home in a property due to lesser dependence on finance and lesser outgo of EMI," Omkar Realtors' Director Devang Verma said.

"We see investment interest bouncing back as expat Indians are not only keen on purchasing a home in their homeland, but have also shown an increased interest in purchasing purely for investment purposes," he said.  
Over the years, NRIs have expanded their foothold in the primary Indian housing market. Currently, it is estimated that almost a quarter of the purchase are emanating from the NRI sphere.

Amongst the NRI source market, the GCC region has a lion's share constituting around 46 per cent of the investments. Out of the estimated $12.5 billion to be invested in financial year 2019-2020, GCC based NRIs are expected to contribute around $5.75 billion. This will be up by 15 per cent when compared to the year before. A major portion of the investments is directed towards major Indian metropolises such as Mumbai, Delhi-NCR, Hyderabad, Bengaluru, and Pune, etc.

As per the World Bank estimates, in 2019, the GCC region is expected to grow by 2.1 per cent, inching up from two per cent growth in 2018. There have been laudable efforts by the GCC economies towards economic diversification.

"NRIs are now preferring to buy a home in India. As property prices are viable and the market is well regulated now, buying a home in India is perceived as a risk-mitigating step," said Ankit Kansal, Founder & MD, 360 Realtors.

360 Realtors is one of the first Indian Real Estate advisories that has a very extensive ground-presence across the region. It has offices in almost all the major Indian cities in the GCC region. Around 30 per cent of its revenues come from the GCC region.

NRI inflow into India will continue to rise in the times to come. The expats will look into a range of property options from smaller units such as studio & 1 BHK to the larger units such as 3 & 4 BHK. The surge in GCC-based NRI investments will stem from a host of factors such as growing contingencies in the region, formalisation in Indian property market & affordable property options.

As RERA has been enforced in India, the market is now transparent & very well regulated, thereby resulting in a spurt in NRI confidence levels. Price options are also affordable, which will be a force multiplier.
Investment by NRIs in domestic property market is from $5 billion in 2014 to $10.2 billion in 2018 and the market is expected to touch $180 billion by 2020.  

"Being the hub for Bollywood celebrities, Transcon Developers' Uber Luxury project 'Transcon Triumph' at Andheri West has seen an upsurge in sales from NRI's residing in Dubai and GCC. This year the NRI investments in the project were seen at 18 per cent at Rs30 crore as compared to 8 per cent at Rs11 crore last year," said Sarojini Ahuja -- VP, Sales & Marketing, Transcon Triumph.

In the recently concluded budget, the Government proposed NRI portfolio investment route to be merged with foreign portfolio investment route. This will lead to increase in NRI investments in Indian capital market.
The decision to allow foreign institutional investors to subscribe to REITS and INVITs is also a welcome move.

The Government has also proposed to relax local sourcing norms for FDI. FDI in real estate will provide a significant boost to the sector in terms of greater foreign capital inflows thus creating more job opportunities and revitalising the growth of the realty sector.

BKC sees newer residential developments in the luxury budget category eyeing high rental income
As India's financial capital Mumbai sees the emergence of Bandra Kurla Complex (BKC) as the premier Central Business District (CBD), the residential demand from the corporates in this micro market is witnessing a spiraling effect.

The micro market is transforming parallel in terms of growing social infrastructure, be it healthcare adding newer hospitals, consulates, international educational institutions, public facilities such as gardens and entertainment and cultural zones, along with new transport system being the metro network. BKC's all-round development seen in the last years has transformed this commercial zone into a mixed-use zone - a simple live-work space.

This centrally located business-cum-leisure hub in India's financial capital now boast of corporates, banks, blue-chip companies, government, banks, foreign firms, consulates have made BKC as their address in Mumbai has witnessed a growth of more than 300 per cent in just over a decade's time.

Today, BKC has become the most sought-after destination for commercial and housing requirement making it second most expensive office market in India and 20th in the world. This had led to property rates touching a whopping Rs32,000 to Rs35,000 per square foot for office space while the residential space is pegged Rs28,000 to Rs30,000 per sq ft, while the rentals yields are pegged at Rs75-100 per square foot again depending on the location in and bordering BKC.

BKC's residential rental YoY income is appreciating by 10 per cent per cent plus annually as the location sees the advent of domestic corporate migration and arrival of expats.
"The commercial success of BKC has put tremendous pressure on the housing demand within bordering and surrounding areas as India's younger corporates prefer a "Walk to Work" concept in a congested city like Mumbai, remarks Babulal Varma, Managing Director (MD), Omkar Realtors & Developers which has developed two boutique luxury residential projects off BKC.

Leading developers such as Omkar Realtors, Sunteck Realty, Radius, Wadhwa, Rustomjee, Kanakia have introduced luxury residences in and around BKC to cater to the rising need of apartments be it outright or on rental for corporates and their workforce. Omkar Realtors project VIVE located across the road to BKC is an HBA-designed, furnished and fully equipped luxurious apartments project offering 1&2 BHK Plug & Live apartments.

"BKC today is in a clear race to offer a corporate lifestyle and living comparable to global finance hubs be it Singapore, Hong Kong or Shanghai, from the perspective of safety, convenience, infrastructure, leisure, hospitality, etc. It is the preferred location for all MNCs and Fortune 500 companies entering India or looking to shift to a bigger setup. BKC is seeing a visible enhancement in the number of space requirements being floated with most of them coming in from the Fortune 500 clients," said Navin Makhija, Managing Director of The Wadhwa Group.

BKC, as a financial, commercial and retail central hub make it as a perfect destination to experience a global lifestyle. It has spawned an immediate surge for premium lifestyle in and around the commercial hub. Adding to this is the much favoured 'Walk-to-Work' lifestyle preferred by the new-gen millennial, making it a hub with millions of professionals involved on a daily run is seeing a surge in rental income, says Himanshu Kanakia, Managing Director, Kanakia Group for the story.

According to leading IPC's and realty channel partners closely following the BKC growth story over the years, the residential supply to cater to the BKC need is surely falling behind with its limited quality inventory. And this puts lease rentals at an advantage over other prime markets in Mumbai.
"In terms of lease rental itself, the limited inventory available in BKC micro market has a distinct 15-20 per cent markup compared to the current prevailing trend in other markets," points out a leading channel partner.

Ashutosh Limaye, director and head-consultancy services at Anarock Property Consultants, said: "The real estate market has seen many phases. Of late, due to the slow down there has been a shift to buyers' market from investors market. The market will continue to remain a buyer's market for a few months more. A small component of it is investors who are looking at duel objective of making it their own home after some years and earning rents in the interim."

'Investors- end users' is a new category of buyers taking shape and growing. There is also a category of 'end users-sellers'. This is typically a small town/ district located rich buyer a house in metros for his children to live while studying, and selling it off after the studies are over.

In the case of investors, they were traditionally investing in mid segment and luxury market due to price appreciation. Fence sitting investors are looking at buying resale houses that have a chance of redevelopment and making the returns after redevelopment.
Srinivasan Gopalan, CEO, Ozone Group, said: "The charm of buying the property back at home and the continuous effort of developers to reach out to the Indian diaspora settled abroad has led to a continuous increase in sales of Indian properties in international market in the last few years. The softening of price clubbed now with depreciation of Rupee, real estate has become the most attractive investment opportunity for NRIs who are also facing almost zero or even negative interest rates on savings, in their country of residence."

- sandhya@khaleejtimes.com