Overseas investors and non-resident Indians have started making enquiries to real estate developers to benefit from the rupee?s continuing depreciation against the dollar. The Indian currency has depreciated 15% to R51.47 until now from August.
?Investors who will invest now when rupee is trading at close to R52 against the dollar would have secured 15% returns already against the time when rupee was R45 against the dollar,? says Shobhit Agarwal, managing director at risk and business consulting firm Protiviti.
?Even if the rupee goes back to R45 against the dollar, they know their 15% returns are secure.?
Southern India?s NRI pockets like Bangalore, Kochi and Thrissur are expected to benefit the most from this momentum, as more residential apartments are sold, wrote analyst Hansraj Singh at domestic brokerage IDBI Capital Markets Services in a report released on Thursday. ?NRIs account for roughly 50% of realty sales in Kerala.?
According to him, the NRI investors are mostly from the United States and the West Asia. ?There are a lot of inquiries from first time buyers too.?
Property consultants say the momentum, however, could be short-lived as currency movements are volatile.
?Still, there is a lot of fluctuation in the currency movement,? says Berinder Sahni, associate director (investment services), at real estate consultant Colliers International.
? The real estate sector is still surrounded with uncertainty in terms of approvals, execution, delivery etc, so how many enquiries will eventually fructify into sales is the real question.?
?The interest from offshore is high,? agrees Amit Goenka, national director (capital transactions) at real estate consultant Knight Frank (India).
?NRIs, however, do not form a very large portion of market demand. It would be only about 5% of the overall market, and the momentum will take it up to a maximum of 7%, which again is not significant. The demand is still very much domestic driven, which is sluggish at the moment,? he added.
Property sales continue to remain lacklustre in Ahmedabad despite having thick NRIs.
?Unrealistic property prices will lead to only a marginal improvement in volumes in these cities,? says Hansraj Singh of IDBI Capital Markets Services.
?Investors are still in a cautious mindset,? says Goenka of Knight Frank. ?If the returns are in rupee terms, then perhaps it does not matter.? ?But, most of the returns are dollar denominated and investors are still not sure whether they will exit with a forex gain or loss,? he added.
Foreign direct investment has increased by 41% to $22.5 billion between January and September in 2011 with real estate receiving $453 million.
(With inputs from Shruti Ambavat)