Govt boosts confidence: NRIs make bulk property purchases anticipating realty revival

MUMBAI | KOLKATA: Vinisha Khiara and her husband Gautam, hoteliers in the UAE, already own an apartment in their hometown Mumbai and are keen to invest in properties in India that would fetch them handsome return on investment (RoI) five years from now.

The enterprising couple, after some good research and bargaining, recently picked up three apartments in Bangalore. “Bulk investment offered us a good bargain along with one-time registration process and will also help in easy monitoring of properties going forward,” says Vinisha. NRIs who have so far shown interest in buying properties in overseas markets, are now keen to invest in Indian real estate. They are making bulk purchases, getting decent discounts, and expecting good returns in anticipation of a revival in the market.

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Property markets in Bangalore, Ahmedabad and outskirts of Mumbai, including Ambernath and Navi Mumbai, are generating good interest among buyers in the UAE, Singapore, the US and Canada.

Bulk buying is clearly helping both sides here as NRIs are getting discounts while developers, the much-needed liquidity. “For the buyer, a bulk purchase offers better discounts along with payment flexibility. Bulk buying or group purchase is always a welcome proposition for developers. Among the main reasons for that is the reduction in the cost of acquisition. Bulk buying helps increase turnover. More importantly, it helps timely execution of projects as cash flows are unhindered,” says Jackbastian Nazareth, Group CEO at Puravankara Projects. “A depreciating rupee has also made properties in India cheaper for NRIs,” he adds.

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According to a recent Assocham survey, Indian property developers are anticipating a 35% rise in inquiries from NRIbased buyers against last year’s about 18%.

“NRIs feel confident about the new government in India and are waiting for an investmentfriendly market in various fields,” the study added. Sensing an opportunity of rising interest among NRIs to invest in Indian real estate, some developers have also set up exclusive sales offices in these regions.

“To tap the growing business opportunities from NRIs, we started an office in Dubai earlier this year. Given that our sales from the Dubai market alone have almost doubled, we are now looking at setting up offices in Singapore and Hong Kong in the next three months,” says Gaurav Gupta, director of Omkar Realtors & Developers. The company has received 30 bookings from West Asia, mainly from Dubai in August alone.

With better sentiments, developers in markets like Bangalore, which is being seen as a most affordable one, have already started witnessing better sales from this segment. “Definitely yes, the interest from the NRI community is rising. Bookings by NRIs so far this year have already surpassed last year’s number. Out of our total 82 bookings since April, around 25% have been from NRIs against 20% of last year’s total sales,” says Satish Shetty, head — Bangalore, Mittal Universal.

While there are NRIs who are buying properties in their respective hometowns due to emotional reasons, investors taking decisions based only on pure returns are also shifting their focus to India.

“With euphoria around the newly-elected Modi government, even hardcore NRI investors, who were so far investing in Central London and Manhattan, have started looking at Indian property markets,” Gupta says. Despite the rupee’s weakness against the US dollar, 2013 proved to be a lacklustre year for the realty sector, given that investor sentiment remained weak. However, post elections, the mood has turned optimistic, especially due to some announcements made by the government so far.

“This year (2014) has been significantly better and we are now close to achieving sales of 100,000 sq ft by December,” says Shabeer Sait, executive head of operations at Irshads Property Matters that has major client base from overseas markets, mainly the UAE.

“With the announcement of 100 smart cities, hassle-free airports across tier-II cities to improve connectivity, etc., measures like these clearly show the government’s intent on infrastructure push.”

Among NRI investors, who are mostly the high-net worth types, professionals and industrialists, mid-segment projects are their favorites, while premium and high-end projects are being considered mostly for end-use, brokers say.