Re­alty trans­ac­tions by NRIs on rise as ru­pee falls

Hindustan Times (Chandigarh) - Estates - - FRONT PAGE - Ash­wini Kumar Sharma ash­wini.s@htlive.com n

The de­pre­ci­at­ing ru­pee has af­fected most In­di­ans ei­ther di­rectly or in­di­rectly, but it has ben­e­fit­ted non-res­i­dent In­di­ans (NRIs) when it comes to in­vest­ing in In­dian real es­tate in In­dia.

In the last one year, the ru­pee has de­pre­ci­ated around 14% from ₹65 at the be­gin­ning of Oc­to­ber 2017 to above ₹74 at present.

The de­pre­ci­a­tion has put more ru­pees in NRIs’ hands, mak­ing prop­er­ties cheaper for them than they were ear­lier. As a re­sult, there is an im­prove­ment in both in­quiries and trans­ac­tions by NRI in the real es­tate sec­tor. “The charms to own a prop­erty back in their coun­try of ori­gin makes NRIs con­sider real es­tate as an op­tion. Need­less to say, the de­pre­ci­at­ing ru­pee value against cur­ren­cies such as dol­lar, pound, the UAE dirham, among oth­ers, is prompt­ing a large num­ber of NRIs to in­vest into the coun­try’s re­alty mar­ket,” said Anuj Puri, chair­man, ANAROCK Prop­erty Con­sul­tants.

With the ru­pee de­pre­ci­at­ing at a faster clip in the last few months, real es­tate ex­perts ex­pect ad­di­tion in de­mand from NRIs. “There is a surge of nearly 15-20% in en­quiries from NRIs an­nu­ally,” said Puri.

There has been a grad­ual in­crease in in­vest­ment by NRIs over the last few years.

Ac­cord­ing to a re­cent re­port by 360 Re­al­tors, a real es­tate con­sult­ing com­pany, “NRI in­vest­ments in the In­dian real es­tate sec­tor have dou­bled from $5 bil­lion in 2014 to $10.2 bil­lion in 2018.

The key driv­ing fac­tors are the dwin­dling ru­pee which has made In­dian real es­tate more af­ford­able, reg­u­la­tions like RERA (Real Es­tate (Reg­u­la­tion and De­vel­op­ment) Act, 2016 ) that have led to in­creased trans­parency and grow­ing de­vel­oper fo­cus on the ex­pa­tri­ate mar­ket.”

“NRIs con­sti­tute a quar­ter of real es­tate sales in the coun­try in 2018-19 till date,” added the re­port. With slow do­mes­tic sales in the sec­tor and lit­tle scope for im­prove­ment in the next few years, de­vel­op­ers are also fo­cus­ing on NRIs. “Builders are also leav­ing no stone un­turned in lur­ing them with a host of ameni­ties and fea­tures,” said Puri.

The fact that In­dian de­vel­op­ers had, in the past, launched and mar­keted projects with an al­most ex­clu­sive eye on NRI cus­tomers is no se­cret, said Puri.

WHAT SHOULD NRIS DO BE­FORE IN­VEST­ING?

The In­dian real es­tate sec­tor may look at­trac­tive be­cause of the fall­ing ru­pee, but like all other in­vestors NRIs should also do their due dili­gence and check the rel­e­vant rules be­fore in­vest­ing. “NRIs with a valid In­dian pass­port need no prior ap­proval un­less they are cit­i­zens of a few neigh­bour­ing coun­tries—specif­i­cally Pak­istan, Bangladesh, Sri Lanka, Iran, Nepal, Bhutan, Afghanistan and China,” said Puri.

“They can buy as many prop­er­ties (res­i­den­tial or com­mer­cial) as they want but are not al­lowed to buy agri­cul­tural land, plan­ta­tion prop­er­ties and farm­houses. How­ever, such prop­er­ties can be gifted to or in­her­ited by NRIs. Trans­ac­tions must be done in In­dian ru­pee (INR) through reg­u­lar bank­ing chan­nels via an ex­ist­ing NRI ac­count,” said Puri.

Though there is an im­prove­ment in the trans­parency level in real es­tate sec­tor since RERA got im­ple­mented, it’s bet­ter to run all rel­e­vant checks.

Be­ing at a dis­tance, NRIs may be at a dis­ad­van­tage in terms of col­lect­ing in­for­ma­tion but they should try to get as much in­for­ma­tion as they can about the de­vel­oper, the project, lo­ca­tion and so on. Lo­cal guid­ance from a real es­tate agent, friend, rel­a­tive or col­league can be help­ful. One should also “hire a re­puted lawyer to vet prop­erty doc­u­ments, ver­ify the orig­i­nal ti­tle deed doc­u­ments; en­sure that the prop­erty ti­tle is in the name of the seller, ver­ify that the seller has not di­luted the right to trans­fer the prop­erty to a buyer and other as­pects,” said Puri.

Last but not the least, NRIs should look at the re­turns real es­tate as a sec­tor and in­vest­ment in­stru­ment has been giv­ing in the last few years be­fore buy­ing, and shouldn’t just get swayed by the fall­ing ru­pee.

MINT/FILE

Re­alty may look at­trac­tive be­cause of the fall­ing ru­pee.

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