A weak rupee and attractive deals are luring Indian expats back to their nation’s property market.
Last year, Anuroopa Mukherjee, 34, bought a three-bedroom apartment in Noida, in the outskirts of New Delhi, with her husband Kowshik, 41. The couple have lived in Dubai since 2003.
“We had been looking for an ideal property which will give us reasonable returns and we eventually zeroed in on Unitech Residences in Noida,” says Mrs Mukherjee, who owns a boutique marketing communications firm in Dubai. “We liked the layout and the area and Delhi NCR (National Capital Region) was an obvious choice as that’s the place I was born and grew up.
While experts say it is a good time to invest in property in the southern Asian nation, they also advise non-resident Indians (NRIs) to think carefully about the location and type of development to purchase.
“In the last six to eight months we’ve seen an increase in interest towards Indian properties by NRIs,” says Mudassir Zaidi, the national director, residential agency, at Knight Frank India. “The other thing that has changed in the last year or so is that all developers are looking at NRIs with far more interest now than they were.”
A slowdown in domestic demand across India last year amid lower economic growth and high interest rates has forced developers to put more efforts into looking abroad for customers.
“There is weakness and there is uncertainty right now until about May [when general elections are due] but there are decent deals available in the market from developers and therefore my sense is that it’s as good as any in terms of time for people to buy right now,” Mr Zaidi says, adding that new marketing promotions – including offers of free parking spaces and waived fees – are prompting buyers to step back into the market.
“We don’t know who’s going to form the government after May,” he says. “But if there is a strong government that comes in, then the property market is expected to start galloping again. Should a weak coalition government emerge, however, the weakness of the property market could continue.”
But many expats take a longer term view when buying.
“My husband is from Kolkata but we prefer Delhi for investment as well as settling – just in case we have to go back and work,” says Mrs Mukherjee. “There is a stronger professional network base in Delhi and we would be more comfortable living there. The NCR region has developed well and provides good living standards for NRIs.”
The couple paid about 8.5 million rupees (Dh500,000) for the apartment. They bought it using a construction-linked plan, which meant that they did not need to get a loan for the purchase. Their property is still being built, so they do not need to worry about renting it out yet. The process of finding the right place to buy took just two months, Ms Mukherjee adds.
“It was actually quite smooth. We didn’t visit the property location before buying – everything was done sitting here in Dubai. We met a property brokerage firm at the Indian Property Show in Dubai and then they helped us chose the property we wanted,” she says.
“I have family and friends in India who helped me take the decision. They visited the site and provided their valuable feedback.”
It’s not the couple’s first foray into the Indian property market. They also bought homes in Indirapuram, Delhi NCR, in 2005 and in Kolkata in 2011 and are already considering buying a fourth property.
However, they are not turning their attentions to their current location in Dubai.
“I would love to buy in Dubai but affordability is still an issue with middle income groups,” Mrs Mukherjee says. “It seems I have missed the train and should have bought in 2011 or 2012.”
The rupee, which is currently trading around 62 rupees to the dollar, has weakened from levels of 45 rupees to the dollar in 2011. With the UAE dirham pegged to the US dollar, Indian expats can buy more rupees per dirham making them the perfect investor for new Indian developments.
“A decline in the value of the Indian rupee and the sluggish realty market has led to an increase in enquiries from NRIs buying residential and commercial properties in Lavasa,” says Anuradha Paraskar, the senior vice president of marketing and sales at Lavasa Corporation, a hill city which is under development about 200km from Mumbai.
However, while there are plenty of opportunities for bargains, Ms Paraskar urges NRIs to tread with caution, advising them to thoroughly research a property before investing as well as looking at the developer’s track record, location of the property and rental yield in addition to the taxation issues.
More importantly though, investors must also consider how they are going to manage their investment from abroad.
“NRIs must ensure that residential projects are professionally managed, which if not, has extremely negative implications for someone who is not physically present in India,” adds Ms Paraskar. “Lack of proper project and facilities management results in accelerated dilapidation of neglected units, and security also becomes an issue.”
Gaurav Mashruwala, a financial planner in Mumbai, says that expats should bear in mind that buying property is a “cumbersome” process and would probably involve a couple of visits in India to inspect homes carefully and complete the transaction.
“It’s illiquid so I would say be very careful about putting money into property,” he advises
Meanwhile, Mr Zaidi at Knight Frank says investors should only opt for credible firms and developers with a good reputation and history in the market. If an expat is looking to buy purely as an investment, it is well worth considering buying off-plan, he adds, because the buyer does not face the hassle of renting out the property while they are abroad.
“There are issues that come in while buying a property that already exists, unless they have somebody who can take care of the property,” he explains. “A lot of NRIs get into the Indian market as an investment option. [They] get in at an off-plan stage, where they don’t have to occupy the property while it is being built. They hold it for three to four years from the time it is launched to the time it is delivered and then sell it off.”
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