NRIs put investment plans on hold despite fall in rupee

Even the worst-ever depreciation in rupee against dollar and stagnant property prices has not managed to get NRI investors to invest in the Indian real estate market. According to an expert, there used to be a trend among NRI investors to invest heavily into the Indian real estate market, whenever the rupee depreciated against the dollar. Yet, this time, the growing reluctance among investors has put the real estate market in a tight spot, even as builders are desperate to sell off their vast unsold inventory. Recently, the rupee tumbled by seven per cent within a few weeks, while it has slid by a massive 39 per cent over the past five years. This fall in the value of rupee provides an opportunity to NRIs, who then invest in the real estate and get a better premium in return. “Two of my clients have postponed their decision to buy different properties at different locations. One client was looking for a plush residential premise in the heart of Mumbai, while another NRI client was planning to buy an agricultural land in the Raigarh district,” said Kishore Sachdev, one of the partners at NM Global, a brokerage firm. He further said that it is the prevailing uncertainty in the market that is forcing the NRI investors to defer their investment plans. Another expert, requesting anonymity, explained the reason for the negative attitude among investors. “The fact that the government has insisted that all the big corporate companies, including the real estate giants, make efforts to improve the market situation till the elections are over, has also contributed to the insecurity among investors,” he said, adding that most NRIs have instead begun transferring their funds into Indian accounts to be able to benefit from the rupee-dollar bridge. The Reserve Bank of India’s efforts to protect the rupee, wherein it brought down the investment ceiling from $2 lakh to $75,000, has played a major role in discouraging the NRIs from investing in India. “This step has hit the NRIs’ confidence significantly and since the real estate is already in an unpleasant situation, this move has shaken the confidence of the NRIs,” said Ashok Jainani, an independent market analyst. Mr Jainani added, “In the last few months, buyers have shown reluctance in investing, resulting in a huge unsold inventory in the market, which has been forcing the builders to reduce the prices.”