As per industry body Assocham, enquiries from and sales to non resident Indians (NRIs) for real estate has spiked up in recent times. And the reason for the same is the sharp depreciation in the rupee against the various global currencies. The rupee is down by 7% from a year ago and by about 40% from five years ago as compared to the US dollar.
It is believed that real estate markets of cities such as Bangalore, Chennai, Mumbai, Ahmedabad and Dehradun are amongst the favorites. Chandigarh has also become a sought after market from countries such as Canada.
As per the realtors, there has been a 35% increase in enquiries from expatriates this year. Assocham has learnt from its survey that these enquiries are largely coming from countries such as USA, UK, the Middle East, Singapore, Canada as well as Europe.
The Indians' love for physical assets such as real estate and gold is one that is well known. Thereby assuming buying properties is a priority for even NRIs (as per the realtors); they seem to be making the most of the weak currency at the moment.
What does all this mean for people back home? Well, in a few words. They will just have to wait some more time for the prices to fall.
For a while now, real estate players have been facing a liquidity crunch. With bank lending becoming difficult, and the burgeoning debt on their balance sheets coupled with piling up of unsold inventory; the only option would have been to sell their unsold properties at lower rates. However, with this demand from NRIs coming along, it does seem that the realtors catering to such clients will get some more breather time. As such, one may say that the rupee depreciation has come in as a blessing in disguise for the sector.
This does raise a question of whether this would be a trend that will sustain or is just a temporary phase that the realtors are making the most of? If it is a temporary spike then over time property prices should cool off.
But there is another angle that comes into focus here. This is that despite the economy growing at a slow pace, realty prices have held up (because of this demand from the NRI community). Therefore, as and when things take a turn for the better, it would only lead to more demand from the domestic front. And therefore the scenario of these high prices sustaining does seem possible.
What will it be? Unfortunately, your guess is as good as ours.