The Rupee Dive Draws NRI Investors to Indian Realty

With the dipping value of the Rupee against the dollar, a rising number of non-residential Indians (NRIs) now have the opportunity to invest in Indian real estate. A number of real estate developers are even targeting their projects towards the expat target customers. According to Associated Chamber of Commerce and Industry of India (Assocham), property dealers are already expecting to see a rise of nearly 35 per cent in enquiries in 2013. The following article will discuss about how the financial trends are affecting the buying pattern in the real estate market.

The Situation

In the present calendar year of 2013, the Rupee has dropped nearly 20 per cent in comparison to the US dollar. The falling value of the Indian currency has obviously frightened the Indian buyers. The record plunge has baffled most Indians as there are many who are anxious about the increasing prices of imported commodities like gold, diesel and petrol, while there are others who are tense about the rules levied by the Reserve Bank of India refraining to take funds out of the country. With the economy weakening, there is another area that is likely to suffer – real estate. However, this is the same sector that has been recently drawing a lot of attention from potential investors from outside India. Let us see how the falling Rupee trend will change the scenario for international investors who have been seeking to buy property in India.  

The Opportunity

For a person with non-Indian currency, namely dollars, the current developments can turn out to be favorable. For this NRI who earns in dollars, things here will be cheaper by 20 per cent. Taking an example of real estate in Mumbai, if a real estate dealer quoted the property for Rs. 5 Crore in January 2013 and the developer is ready to sell it at the same rate even today in August, an expatriate would actually be paying 20 per cent less than what he would have spent in January.  

The Assocham Report

According to the recent findings released by Assocham, the Rupee has collapsed by almost 34 per cent in contrast to the US dollar since August 2011 and has already surpassed the value of Rs. 65 against a dollar. This plummeting spree is being closely observed by the Indians settled abroad who were wishing to accelerate investment strategies back home.

 Assocham carried out a random study of about 1250 real estate developers in areas like Delhi-NCR, Mohali-Chandigarh, Dera Basi, Mumbai, Bangalore, Kolkata, Hyderabad, Pune, Ahmedabad, Dehradun and Chennai. The survey revealed that the favorable exchange rates were prompting NRIs to explore and park their money in Indian real estate.

It is an ideal time for the non-resident Indians to invest as the sluggish realty market also seems to be on their side. They can save from 20 to 30 per cent on the value of their property. And if the Rupee continues to slip, one may see further interest from overseas.

Most of the property dealers and developers have reported that majority of the NRI enquiries and cash flow is coming from the Arabian Gulf region, primarily UAE.  After this, Singapore, USA, Australia, Canada, UK, and South Africa are countries with the NRI population rising up to India’s realty. The demand for property has pertained to the luxury residential projects and high-end commercial buildings.

The Remittance

About 5 million Indian expats reside in the 6 Gulf Co-operation Council (GCC) nations of UAE, Bahrain, Oman, Kuwait, Qatar and Saudi Arabia. These NRIs, who have been growing in number, remit almost $30 billion to India each year.

The rising curiosity of these potential investors have instilled confidence in the Indian developers, who are now optimistic and look forward to a high number of bookings in 2013. The investor enquiries have also risen this year by up to 25 per cent.


clip_image002Author bio: Being a prolific writer, Devika Arora is dedicated to studying the current property trends and compiling facts and figures for the benefit of potential investors. Her articles and other write-ups analyze the realm of Indian real estate and its prospects. The above piece of work talks about the impact on real estate due to the falling value of the Rupee.