Indian realty cleared of fly-by-night operators

Much has been said and written about the return of the NRI (non-resident Indian) to the Indian real estate scene. This begs the question — were they ever really gone?

It can be said that they had beaten a partial retreat from Indian real estate in the past 3-4 years, put off by the negative hype that the media had been spreading about this sector and also the fact that the market was not really friendly to their needs.

Scores of NRIs had burnt their fingers on property purchases in the past. Removed as they were from the main milieu of the market, they were unable to judge what the right kinds of deals were.

Many fell prey to fraudulent claims by mercenary developers, who had begun marketing their projects as “NRI havens” in the hope of roping in gullible non-resident buyers.

In many cases, these projects were not cleared for development at all, or the developers were seriously undercapitalised and therefore not well placed to complete their undertakings. In other cases, the properties that the developer delivered showed massive deviations from the original plans. Often, the “magical locations” that developers trumped as the next boom areas of a city remained barren, bereft of even the most basic infrastructure and therefore unable to draw demand.

As a result of falling prey to such mercenary players, countless NRIs fell into money traps and were unable to extricate themselves. Unlike resident Indians, they did not have the advantage of being physically present in the country able to engage in court battles with the errant developers on their own home turf.

Failed to deliver

Their hastily made investments languished, held hostage by developers who had used them to raise interestfree capital for their projects but failed to deliver on their promises.

Today, the scenario has changed considerably for NRIs from the “Wild West” days — partly because NRIs have it a point to be more informed, and partly because the Indian real estate market itself has become more regulated. New laws across states have been targeting illegal constructions and unfair market practices. The incumbent government has been working hard to make the real estate sector a better place to deal in, with visible results.

At the same time, the market itself has evolved with the times. No longer are NRIs limited to investing in deficient homes that can in any case not give them the standard of living that they are used to abroad and aspire for back home in India. Massive integrated township projects by reputed, listed developers now present NRIs with an unambiguous option of transparency, advanced lifestyle and assured returns on investment. Many of these projects meet international standards of excellence in terms of stand-alone infrastructure, connectivity, safety and convenience.

Instant noodles

In fact, integrated townships have turned out to be the ideal option for NRI property buyers in more ways than one.

While the development of such projects does take longer than smaller residential projects, NRIs stationed abroad for the interim are definitely not looking for “instant noodles”.

What they do seek to know is that they are investing in a project which will fully meet all their requirements on their return to India. When a township project is backed by the reputation of an established, adequately capitalised developer, they know that their investment is secure.

At the same time, the Reserve Bank of India has made it a lot easier for non-residents and also people of Indian origin (PIOs) to invest their funds in Indian real estate. This increasing ease of investment, coupled with the attractive scenario that the depreciating rupee presents against the currencies that NRIs earn in, has done a lot to woo NRIs back to the Indian property sector.

All in all, the NRI is back in force, and is amenable to making well-calculated long-term plays in the country’s real estate landscape.

Today, the scenario has changed considerably for NRIs from the “Wild West” days — partly because NRIs have it a point to be more informed, and partly because the Indian real estate market itself has become more regulated.

The writer is Managing Director of Pride Group.