India’s real estate industry shows promising outlook
Muzaffar Rizvi (Interview) / 15 December 2013
NRIs urged to carefully evolve investment plan in property
The real estate sector in India may face slow growth next year in the wake of the forthcoming Lok Sabha elections and it is the right time for non-resident Indians, or NRIs, to buy property due to higher exchange rates and better return on investment, an industry expert says.
Sunil Jaiswal, chief executive of Sumansa Exhibitions, said India has been ranked amongst world’s top real estate investment markets with investment volume of $3.4 billion in 2012. The property sector has a promising outlook and growth will continue in the longer run.
“Real estate growth might be slightly slow during 2014 as the country goes for the Lok Sabha elections. But in 2015 onwards, the markets should grow at healthy pace and growth looks promising,” Jaiswal told Khaleej Times during an interview on Saturday.
He said India will see a growth increase only after the general elections in 2014 and this growth can be seen across all sectors including the real estate due to consistent policies of successive governments in the country.
“Policies are primarily made by the bureaucrats and not by the political parties, but whichever party comes to power will push the policies which are more likely to help them build good impression. The real estate outlook will remain to see the same growth, policies and changes irrespective of any party coming to power,” he said.
About the signing of a Bilateral Investment Protection Agreement between the UAE and India, he said it is a step in right direction and will promote institutional investment from the emirate.
“This is an agreement signed by Abu Dhabi and New Delhi, which will mainly help the institutional investment from the UAE to India. The agreement is more for the protection of such investments, however this doesn’t have much relevance to NRIs investments in property sector of India,” Jaiswal said.
The UAE has investment interests in India mainly through real estate developer Emaar Properties and telecom operator etisalat, while India has varied investment in the UAE, surpassing Dh200 billion, according to figures released by the Indian Business and Professional Council Dubai.
The UAE is the 10th-largest investor in India in terms of foreign direct investments, according to official figures.
Bilateral trade between the two nations goes back to centuries, with India now among the UAE’s biggest trading partners. Bilateral trade had reached $75 billion in 2012-13, while bilateral investments have not matched the level of trade.
The CEO of Sumansa Exhibitions, the organiser of the popular Indian Property Show, said it is the right time for NRIs to make an investment in the property sector due to various factors.
“Buy now. It’s a good time to buy due to higher exchange rates and better return on investment. Typically, periods of depreciated rupee are good times to invest as one can acquire quality real estate at reasonable price,” Jaiswal pointed out.
Jaiswal said the returns on property investments are always higher, compared to other investments due to its minimal volatility and stable appreciations. NRIs seem to have cashed on in the situation as many of them are even buying multiple units for investment purposes.
“The NRIs should cash on the situation of depreciated rupee,” Jaiswal said. He advised NRIs to carefully evolve their investment plans depending on their personal preference and requirement to either buy a first property or purchase an additional unit, pre-close home loans if any, send money to a bank account in India and make an investment as and when the would-be investor comes across a good opportunity.
To a question, he said the Indian property market is definitely not geared up for property “flipping” within short investment periods; mid-to-long term investment options with a four- to five-year window would be ideal.
“Such an investment horizon is a safe hedge against risk related to market variations, and ensures that the property gains healthy appreciation regardless of market dynamics,” Jaiswal said. He said sooner or later, the Indian real estate sector will have a regulator that will streamline a lot of challenges currently faced by the government.
Jaiswal said NRIs based in the Gulf in general and the UAE in particular are major source of investments in the Indian property sector.
“As there are no official statistics available, but according to rough estimates, Rs15 billion investments is annually made from the UAE only towards Indian property sector,” he said.
Elaborating, he said remittances from the GCC to India rose to $24.93 billion in the past financial year that ended in March compared to $24.382 billion and $16.431 billion in past two years.
“The GCC remained the largest source of remittances accounting for 37 per cent of the total remitted amount, according to a recent study. And as per the Reserve Bank of India statistics an approximately 30 per cent to 40 per cent of remittances goes towards real estate.”
To a question about near-term forecasts for the real estate sector, he said: “In my opinion, you have to look at city-wise dynamics; every metro and non-metro in India has a story to say. It has its growth scale going up to due natural resources, manufacturing, exports, local employment, etc.
“But if you take the history of India and compare the prices in the last 40 to 50 years, you are surely going to have a smile on your face and not think twice to invest anywhere. The growth might be slightly slow next year, but 2015 onwards the markets should grow at healthy pace.”
About the plans for the forthcoming Indian Property Show, he said the three-day event is all set to open on December 19 at the Dubai World Trade Centre.
“The show is poised to be the biggest-ever edition with over 140 developers participating from across India. Over 40,000 properties worth billions of rupees will be showcased over the three-day exhibition,” he said.
Jaiswal said the event is specially designed to meet the needs of NRIs in the Middle East, featuring the latest projects in India and diverse offerings from the finest developers in Delhi, Noida, Greater Noida, Gurgaon, Mumbai, Navi Mumbai, Pune, Chennai, Jaipur, Bengaluru, Mangalore and Kochi, among others.
“We’ve got many exciting things happening at the show this year, including a free property give-away through our ‘Home Shanti Home’ campaign, wherein any visitor who comes to the show stands a chance to go into the raffle draw and be the lucky one to win a property back home in India,” he said.