NRI interest in Gurgaon realty up as touches historical low

GURGAON: The fall of Rupee has raised speculations of increased NRI investments in the reality sector. Builders and analysts say that Gurgaon continues to be a popular destination for NRIs buying property mainly for the purpose of investment.

The Indian Rupee (INR) has seen 12.0% depreciation against the US dollar since the start of May till June, thereby forcing its value go down against all other currencies pegged to US dollar, including the UAE Dirham (AED). As a result, the Rupee has also depreciated against the AED by 12.0% during the same period.

Builders maintain that this slip might prove a good opportunity to tap the potential offered by the NRIs.

According to Ravi Saund, COO, CHD Developers Ltd, most developers are taking cue from this situation and coming up with products primarily targeted at the NRI segment. "We, at the CHD, are coming up with high-end studio apartments in our upcoming commercial tower CHD Sky One. This will majorly be targeted at our NRI customers," he said.

Gurgaon has emerged to be one of the most lucrative investment options for NRIs since it ensures a good return on investment. The areas most preferred by the NRI segment are Golf Course Extension, Sohna Road and the upcoming Dwarka Expressway. "If the rupee maintains its current levels, real estate developers could see more NRI investments during the period. On the downside, cost of construction may marginally go up as we will have to pay more in rupee in order to procure raw materials," Saund added.

Said Pankaj Bansal, director of M3M India: "For many NRIs, buying a property in India (either for self-occupation or for parents or siblings) remains a popular investment option. The momentum, however, may get a temporary boost or bust depending upon the Rupee's equation vis-a-vis the American Dollar."

However, Bansal said, like any other price factor, after the initial euphoria settle down as reality sinks in and is accepted. "Over the sustained long term, demand from NRIs settles down at the normal levels eventually," he said.

Explaining the trend, Sanjay Sharma, managing director, QuBREX, said, "The queries from NRIs might have increased but the actual investment in India will depend upon whether they feel the Dollar is headed towards Rs 50 or slips towards Rs 70. If they believe that the Dollar is going to get stronger, then they might prefer to invest in the recovering market of US rather than in the Indian real estate market."

A recent survey conducted by Sumansa Exhibitions, organisers of the successful annual event called the India Property show in UAE, possibly reveals that NRIs place a higher intrinsic value on property owned in India over that of property owned in Dubai or elsewhere.

Comparing the market in UAE and India, Ashutosh Limaye, head, research & REIS, Jones Lang LaSalle India, said real estate transactions in Dubai had increased by 8% to 154 million AED in 2012. Not surprisingly, this recovery is backed by huge investments being made by expatriates, particularly from India.

"It could be argued that expatriate Indians may be favouring Dubai over Indian real estate on the basis of socio-economic and other factors. Indian investors were buying properties in Dubai as it offers relative political stability, world class infrastructure, tax benefits, attractive prices and geographical proximity. Also, Dubai's economy has been recovering since last two years, growing by 4.4% and 3.4% in 2012 and 2011, respectively," said the analyst.

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