‘Best opportunity for NRIs to invest in Indian real estate now’
Times News Service
MUSCAT: Strong regulatory environment and stronger US dollar offers best opportunity for non-resident Indians (NRIs) to invest in Indian real estate now, according to the patriarch of Indian real estate.
Sound regulatory environment, increased transparency and accountability as well as the establishment of escrow accounts under the Real Estate (Regulation and Development) Act (RERA), coupled with a favourabe exchange rate for NRIs make investment in Indian real estate a lucrative options against other asset classes, said Dr Niranjan Hiranandani, President of the National Real Estate Development Council (NAREDCO), which works under the aegis of Ministry of Housing and Urban Affairs, Government of India. “New housing launches across top seven cities in India have increased 27 per cent year-on-year in January-March 2018,” Dr. Niranjan Hiranandani, who is also the cofounder and managing director of Hiranandani Group, told the Gulf Cooperation Council (GCC) media at a press briefing in Dubai.
“The Indian Government has launched various initiatives, including ‘101 Smart Cities’ as also ‘Housing for All by 2022’, which have led to positive results. Similarly, the focus on affordable housing as a segment which has been given infrastructure status as also other benefits including taxation benefits and subvention schemes has resulted in this segment getting a boost. It all leads to a positive situation, which is apt for expatriate Indians to invest in,” he said.
Buying a ‘home, back home’ is a matter of sentiment; but Investments by expatriate Indians in Indian real estate have steadily grown over the past few years. Recent media reports mention investments by expatriate Indians in Indian real estate having doubled from US$5 billion in 2014 to US$10.2 billion in 2018.
To a large extent, this follows the new regulatory regime which has made Indian real estate more transparent and increased the Indian real estate developers’ accountability in terms of possession deadlines and quality of construction. The recent global currency value fluctuations have made it a sweeter deal for the expatriate Indians, whose purchasing power vis-à-vis the Indian rupee has gone up.
Growth in the Indian real estate market is being driven by the fast rate at which urbanization is happening. A recent survey mentioned India’s urban population as expected to reach 800 million in the next 30 to 35 years, becoming equal in size to India’s rural population. “Given this, it has become imperative for the Indian Housing Industry to accentuate and rise to the occasion and match the demand,” said Dr. Hiranandani.
Hiranandani Group, which is among the leading luxury real estate developers in India. Based in Mumbai, the Hiranandani Group and its affiliated companies have on-going projects in Mumbai, Thane, Panvel and Chennai, where expatriate Indians have traditionally bought 12 to 18 per cent of the total off-take in their projects across the past few years.
Dr. Niranjan Hiranandani has been at the forefront of industry-government discussions on enhancing the positives which would boost further growth in Indian real estate.
He said that most of this demand is expected to be in the affordable housing segment and the middle income group. From the perspective of GDP growth, the forward and backward linkages mean Indian real estate will also create more employment opportunities.
“The Indian real estate market is expected to touch US$180 billion by 2020. Housing sector is expected to contribute around 11 per cent to India’s GDP by 2020,” added Dr. Niranjan Hiranandani. For the expatriate Indian, it is a situation where the advantages just keep adding up: it begins with the recent reduction in value of the Indian rupee - which makes Indian real estate more affordable, new regulatory regime including RERA, which have led to increased transparency, as also growing focus by Indian real estate developers on the expatriate market.
The present Indian government has set high standards of execution of policies and plans by bringing in reforms for real estate sector and also by promoting ease of doing business. With the introduction of RERA, a positive approach towards home buying is evident. India’s real estate has evolved into a consumer friendly industry, in terms of transparency from the builders’ side to expatriate Indians easily getting home loans from financial institutions.
“Naredco has been working in sync with the Indian Government on various aspects which would provide the much needed impetus and fillip for enhancing growth in real estate,” he added.
India has worked hard to earn the status of being one of the fastest developing countries, and if the GDP keeps growing at the same rate as now, by 2050 India will be on course to becoming among the most powerful economies, globally. Given these positive developments, the role of real estate continues to be significant; and it is expected to be among the chief drivers of India’s economic growth, said Dr. Niranjan Hiranandani.
The positive investor sentiment which has been observed among expatriate Indians leads one to conclude that expatriate Indians and foreign consortia are looking for opportunities to invest in Indian real estate including commercial spaces. The drop in the value of the rupee will have a positive impact in terms of enhanced purchases by expatriate Indians, which is sort of a windfall gain.
“As overseas investor sentiment turns ‘sunnier’, the expatriate Indian will be able to buy property by paying fewer dollars now. Hopefully, in the new regulatory regime, this trend will continue - not just in 2018, but also in the future,” Dr. Niranjan Hiranandani added.