The depreciating rupee has affected most Indians either directly or indirectly (read here to know how), 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.