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Time for NRIs to invest?

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At current rupee levels and sluggish market conditions, NRIs could possibly benefit from some attractive options available in the property sector. There are other factors to be considered too, say professionals in a conversation with RANJANI GOVIND

As the rupee is seeing itself in shades of depreciation over the last 10 days, the market is abuzz with comments whether it is the right time for one to invest. For an Indian, is the scene costlier, or does it mean it is easier on NRI pockets?

The Hindu-HABITAT spoke to some market professionals about the effect that such ‘depreciation-times for the rupee’ can bring about.

Says finance expert Balaji Rao, “The current massive depreciation in rupee value against the dollar may have dampened the spirits of the local property buyers seeing escalating costs, but the same may not be true for someone who brings money into India for whom the purchasing power increases dramatically. There is a lot expected from NRIs: that they would bring in foreign money which offers them a great opportunity to invest in Indian property. This could be true to a large extent but many builders, we hear, tend to hike the prices for NRIs which proves a dampener to them in terms of the value earned.

Further, the fall in rupee categorically cannot be attributed to poor economic fundamentals; the rupee is expected to bounce back, it has in fact already recovered slightly, with macro factors improving, which the government is frantically working on.”

Balaji goes on to explain that if property prices remain unchanged ever since the rupee depreciation, then it could make a good investment. “But what seems more paramount is, if it is an outright purchase (without a bank loan) then it makes a good proposition, but if one is taking a loan, the increasing interest rates could be a deterrent leading to higher EMI outflow, which may not offset the low property price deal. NRIs should look for an overall good deal in the given circumstance,” adds Balaji.

Mixed emotions

Snehal Mantri, Director-Marketing, Mantri Developers, seems to feel that the sudden fall in the rupee against the dollar has generated mixed emotions amongst the consumer and realtors in India.

The fall has the industry witnessing an increase in investment from the NRIs which is fuelling the steady growth in the otherwise slow economy.

Explains Snehal, “According to the Associated Chamber of Commerce, realtors have seen an increase of 35 per cent in business enquiries from the expatriates this year and we at Mantri have also seen an increase in enquiries which could lead to positive results.”

Says Suraj H. Asrani, COO, Cornerstone Properties, “The fall in rupee has made investment in India more attractive for the Indian diaspora abroad. Real estate is seen as a safe and steady investment as the Bangalore property market offers attractive investment options across the spectrum of development verticals — be it residential, commercial, gated communities or master-planned enclaves.”

Psychological boost

Shveta Jain, Executive Director, Residential, Cushman & Wakefield India, is also confident that the depreciation provides a psychological boost to both NRIs and the developers.

“Though it is commonly felt that with each depreciation cycle NRIs will find it cheaper to invest in real estate in India even as inquiries go up with developers focusing on their marketing efforts to attract more NRIs, this does not happen immediately. The primary reason is that there are logistical constraints such as identifying the right property, negotiating a deal, being able to repatriate large sums of money in outright purchases, completing all the necessary documentation and formalities, etc., during the transaction lifecycle.”

Shveta feels a typical purchase transaction may take a NRI buyer at least one to three months. And during this period, the rupee may strengthen and the notional advantages that could accrue due to the rupee’s depreciation could be lost. This could get further compounded if the purchase is not outright and the NRI buyer needs to either pay in instalments or is booking an under-construction property, she says, as again there is no guarantee that he will continue to enjoy the benefits of a depreciated rupee during the payment lifecycle.

“In the short term, the depreciation of the rupee may mainly benefit those buyers who are already in the process of finalising an existing transaction.”

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