India draws NRI investments in real estate due to rupee depreciation, policy reforms

BENGALURU: In the tug-of-war between the rupee’s depreciating value against the dollar, the current geopolitical scenario and rising interest rates, NRIs (Non-Resident Indians) are gaining by driving up real estate sales to India.

Demand from NRI homebuyers has increased across the board, from mid-income projects to premium and luxury segments and plotted developments. The Indian currency has gone down to 5.2% against the US dollar in just the first half of 2022.

In a statement given to the Economic Times, Niranjan Hiranandani, vice-chairman of the real estate industry body NAREDCO, and managing director of the Hiranandani Group, said that the worldwide economic scenario has thrown up various challenges. Still, India is a haven when it comes to economic growth potential. He also mentioned that beyond just NRI sentiments towards India, Indian real estate is wealth creation and growth option for the NRIs.

Apart from providing a haven in these turbulent times, Indian real estate also includes capital growth and rental income. All of these factors and the digitisation of procedures create a win-win situation for investors, he said.

Many developers, big players with a proven delivery track record, have increased inquiries and conversion into actual home sales in the recent few months.

Ramesh Ranganathan, chief executive of K Raheja Corp Homes, told Economic Times, “The depreciating rupee is an opportunity for NRIs to invest in residential real estate in India. This is backed by the rising number of enquiries from multiple geographies, especially the Middle East. We increasingly see that requirements are driven by their international experience and exposure.”

The UAE and Saudi Arabia, with a sizable Indian population, peg their currencies to the dollar. This signifies that the rupee has depreciated at the same rate as the dollar.

Apart from domestic buyers, premium properties in tier-I and metropolitan areas like Mumbai, Delhi-NCR, Bengaluru and Pune and beautiful places at hill stations and along the seaside around India have been attracting increasing interest from NRIs.

When the rupee has declined in the past, NRIs have opted to regard real estate as an intelligent investment back home since it gives them more purchasing power in India.

Property has been the most sought-after assets in this category, particularly by Gulf residents planning to return to their home country after retirement. However, demand and inquiries from other foreign markets have begun to increase, in addition to the UAE.

The government’s sequence of changes, notably the Real Estate (Regulation & Development) Act of 2016, have bolstered NRI investors’ trust, and they are increasingly open to buying properties in India.

NRIs are also flocking to the country to invest because of the expected price increase in residential property prices due to increased demand. While the US currency remains strong versus the rupee, Indian real estate has been booming, with high sales in major markets.

As seen by recent quarterly revenues that have surpassed multi-year highs, a strong demand conversion undercurrent is pushing sales of both listed and private real estate developers.