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Falling Rupee Makes Mumbai Expensive Properties Affordable For NRIs


Falling Rupee Makes Mumbai Expensive Properties Affordable For NRIs

MUMBAI: In a sluggish property market, NRIs (non-resident Indians) are suddenly the flavour of the season. The zooming dollar may be bad news for many, but for builders they are a potential target ever since the rupee depreciated 12% against the dollar in the past two months.

Real estate market sources said there is an increased level of interest from Indians living abroad. Experts said a city flat costing Rs 5.5 crore ($1 million) in May will now cost around $900,000 for an NRI investor.

The saving is substantial, but are NRIs biting the bait? Said Abhisheck Lodha, managing director of Lodha Group, "The interest levels are much higher. But since the drop has only happened in the last four weeks, the conversion to higher transaction levels will take shape over the next two months."

According to an estimate, the NRI residential market in Mumbai is around 15%. "Of the total annual apartment sales of Rs 50,000 crore in Mumbai, about Rs 8,000 crore comes from NRI investors," said Lodha. The rupee depreciation has made Mumbai's expensive properties a little more affordable for the average NRI.

Developer Parag Munot of Kalpataru Group said he witnessed "good traction" in the Mumbai-Pune markets ever since the dollar touched Rs 60. "The interest is more towards properties in the Rs 1 crore to Rs 3 crore range rather than high-end apartments," he said.

But Pranay Vakil, chairman of property consultancy firm Praron, said many NRIs are not jumping in yet. "Its the greed factor. They are waiting for the rupee to fall further and till it touches Rs 65. These are not actual users, but investors with surplus money," he said.

Pankaj Kapoor of property research firm Liases Foras said NRIs have generally preferred destinations like Bangalore, Pune, Chandigarh and Kerala. "They are not comfortable with Mumbai because of the risk factor and because builders here do not deliver on time," he said.

Ashutosh Limaye, research head of Jones Lang LaSalle India, said Dubai's property market recovery is largely backed by huge investments by expatriates, particularly from India. Non-resident Indians are amongst the top five investor communities in the region.

"With their natural affinity towards India, and against the depreciation of the Indian rupee against the US dollar, the NRI community's real estate investment decisions may change in favour of the Indian market if certain parameters are met," he said. These include higher economic growth, improved infrastructure, rise in demand for commercial space and social infrastructure.

"Putting these factors into perspective, the recent fall in the Indian rupee could potentially act as a trigger for the NRI community in the Middle East to switch focus towards properties back in India," he said.

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