The slide in the Indian rupee seems to be encouraging non-resident Indians living in the UAE to further invest in their homeland, with lesser dependence on finance, reveals a survey conducted by the organisers of the Indian Property Show. Based on feedback from about 15,000 NRIs, the figures showed that 42.34 per cent of respondents declined requirement for finance to buy property - up from 33.66 per cent a few months ago.
"Typically research shows that currencies that depreciate historically and regularly are accounted for in the asset prices and form part of the 'rational expectations' of the investor. Given that case, it appears as if the decline of the currency is not something that will in itself stimulate investment in any particular asset class; rather the decision is predicated on a host of endogenous and exogenous factors that include the state of the economy, interest rates, etc.," says Hussain Alladin, head of IR and research at Global Capital Partners.
The research also highlighted investors' increasing interest in buying property for investment purpose rather for own use, a rise of about 17 per cent was observed from 34.98 per cent to 40.87 per cent now looking to buy property in India either as their first investment or for an additional investment to build their property portfolio.
"Investment in home is a life-long affair and one has to think carefully before investing. For all NRIs, a home in India should be the first priority, regardless of any other factor. Having said that, the current low-value of the Indian rupee offers some extra gains - you get more rupee per US dollar or UAE dirham. So, if an NRI has an ongoing payment obligation for real estate, they will shell out less money for the same installment. One could fast-track a few installments to benefit from the current exchange rate," observes Atif Rahman, partner and director, Danube Properties.
In terms of popular property investment destinations, Mumbai (16.6 per cent), Bangalore (10.15 per cent) and Chennai (8.72 per cent) retained the top three slots, with Cochin and Hyderabad gaining further popularity. Other cities that made it to the top 10 included Pune, Delhi, Coimbatore, Ahmedabad and Goa.
"Further decline in the Indian rupee combined with a spate of regulatory reforms seems to be encouraging NRIs to invest in their favourite asset class. We see interest bouncing back as expat Indians are not only keen on purchasing a home in their homeland but have also shown an increased interest in purchasing purely for investment purposes," said Kowshik Mukherjee, head of the Indian Property Show and chief operating officer of Sumansa Exhibitions, organisers of the exhibition. It is scheduled to be held from June 21 to 23 at the Dubai World Trade Centre.
Also, the survey found that 28 per cent of respondents showed interest in investing in properties within the range of Rs7.6 million to Rs20 million, while 46 per cent were keen on properties ranging between Rs2.5 million to Rs7.5 million.
Lesser number of NRIs are seeking finance to purchase property in India, 57.66 per cent now compared to 66.34 per cent last year.
"With regards to investment being more equity as opposed to debt-based, that is typically the case with investment inflows into the country [even in Dubai, the ratio of debt taken by residents is typically higher than it is for non-residents as per banking norms]. What we can state is that surveys do indicate a heightened interest for remittances; whether this translates into property purchases is now a function of economic variables, particularly the level of interest rates as a rising interest rate cycle attracts liquidity," adds Alladin.
There was a decline of over nine per cent observed in the number of people looking to buy property for own use, from 65.03 per cent last year to 59.13 per cent now. Additionally, more NRIs are planning to buy as an investment, up by 15 per cent.
Slightly more than half of the respondents (51 per cent) were interested in purchasing property within the next six months. Nearly 65 per cent of potential investors belonged to the age bracket of 30 to 50 years.