NRIs’ confidence in Indian realty remains low

[] While Indian real estate developers are spending large sums to attract wealthy Indians from across the world, non-resident Indians seem unwilling to commit to real estate deals in India. We examine the reasons

Nearly two-thirds (as many as 64%) of non-resident Indians (NRIs) categorically say that they would wait for more clarity and transparency in the market, before making an investment decision in the Indian property market. 72% of them are not sure if the realty market has become more transparent in recent times, despite the government’s announcement of various policies.

You are reading: NRIs’ confidence in Indian realty remains low

These are the findings of a global online and offline survey by Track2Realty, a real estate think-tank group and its global alliance partners. NRIs from the US, UK, Middle East, South Africa, Canada, Australia, New Zealand, Malaysia, Singapore and Mauritius, participated in the survey. They were given a mix of open-ended and close-ended questions, to assess their investment choice in the Indian property market.

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“I read so many horror stories about the property markets in India on different social media sites. It is a question of investing a fortune and it is better to be safe than sorry,” says Govind Bhargava, an NRI from Canada.

The top reasons why NRIs are reluctant to invest in the Indian property market are:

  • Economic uncertainty
  • Lack of transparency
  • Currency fluctuation
  • Absence of due diligence
  • Low rental returns
  • Better options in other markets

[] NRI investment in Indian realty hit by lack of ‘trusted information’

Have government policies made any difference?

Jessy Kutty, an NRI in Dubai, feels that the chances of getting a realistic picture is very difficult, even if you take the assistance of friends and relatives to verify the property back in India. Issues like lack of clear titles, timelines of delivery and mismatch between promises made and the final product, are faced by many. “My relatives in Kochi have burnt their fingers, while purchasing apartments for self-use. This happened, even though they were physically present and knew the local market and the developer. As an NRI, I am not in a position to visit the property often,” she says.

Why NRIs feel the Indian property market isn’t attractive

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70% of the respondents said that they would explore investment opportunities in Indian real estate, if there is a proper due diligence mechanism. Over the short to medium term, NRIs cite economic uncertainty as the biggest deterrent, to commit for a real estate investment back home. 58% said that the present state of the Indian economy in general and the state of the real estate market in particular, do not evoke confidence.

Low rental returns is another reason that more than half the NRIs (54%) narrate, as the reason why they don’t see Indian housing market from the standpoint of investment. “Why should I park my money in an asset that does not produce income, has huge risk involved after having paid in advance and then facing the challenge of its maintenance?” questions Parag Dhavle, an NRI in UK, who feels that real estate no longer gives the kind of sizeable return on investments, the way it used to. 64% of the respondents also felt that the Indian rupee could become even weaker in the next few years – something that makes it a bad move to invest into the Indian real estate.

What NRIs think, about the Indian property market

  • 64% NRIs would wait for more clarity and transparency in the market, before investing.
  • 72% are not sure if the Indian market has become more transparent in recent times.
  • 46% feel that there has been no tangible difference after demonetisation.
  • 74% are apprehensive about the lengthy and challenging legal options.
  • 70% claim that they would invest in Indian real estate, if there is a proper due diligence mechanism.
  • 58% feel that the Indian economy and the state of real estate market, do not evoke confidence.
  • 54% narrate low rental returns as discouraging factor.
  • 64% NRIs feel that a weakening rupee makes it a bad move to invest in Indian real estate.
  • 76% NRIs feel it is time to look at Dubai and London properties, as safer and cheaper investment options.

(The writer is CEO, Track2Realty)

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Category: Lifestyle

Debora Berti

Università degli Studi di Firenze, IT

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