Non-resident Indians can take advantage as weakening rupee, falling real estate prices give investors bang for their buck back home

By Cheryl Arcibalcheryl.arcibal@scmp.com

/ https://www.scmp.com/business/article/3098581/its-advantage-nris-weakening-rupee-falling-real-estate-prices-give?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp&utm_content=3098581 |

August 25, 2020 2:57 PM SGT

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The falling rupee and declining home prices are giving a fresh impetus for Indian nationals living overseas, including those in Hong Kong, to buy property back home, according to analysts.

Indian developers are making an aggressive push to sell homes to the 32-million strong diaspora, which includes persons of Indian origin and non-resident Indians (NRIs). This group remitted an estimated US$83.1 billion back home in 2019, according to the World Bank, although the amount is likely to drop by 23 per cent to US$64 billion this year as tens of thousands of NRIs have lost their jobs because of the coronavirus pandemic.

"While tapping Indian diaspora across the world has been a strategy for more than a decade, it started gaining traction only in the recent past," said Arvind Nandan, managing director for research and consulting at Savills India.

"The rupee falling against local currencies in some of the countries like the US, UK and Singapore has worked in favour of NRIs who are looking at buying property back home."

The rupee has weakened by more than 13 per cent to 74.93 against the US dollar from 66.14 about five years ago. It has fallen nearly 5 per cent this year. In the first half ended June, property prices declined across most Indian cities with Delhi and its satellite cities, Pune and Chennai witnessing the most correction at 5.8 per cent, 5.4 per cent and 5.5 per cent from a year ago, respectively, according to a Knight Frank India report.

Flat's DLF's The Camellias project range from 7,300 sq ft to 16,000 sq ft. Photo: Handout alt=Flat's DLF's The Camellias project range from 7,300 sq ft to 16,000 sq ft. Photo: Handout

Prime residential prices in Mumbai declined by 6 per cent in June from six months ago, according to a Savills index released this month.

"This is the highest fall among 28 global cities in the world that Savills Research monitored. Hence, we consider it as a favourable time for customers, wanting to buy homes in India, to take advantage of the price benefits," said Nandan.

"Moreover, rental values in Mumbai have scaled down by little over 2 per cent over the same period, indicating a market that has ability to hold its income capacities. Overall, this appears to be a reasonably good bet for investors."

In Hong Kong, India's largest publicly listed developer DLF is marketing The Camellias, a luxury residential enclave that overlooks 200 acres of a golf and country club.

Launched in 2014, The Camellias comprises 16 towers containing 429 flats in total with one unit per floor. The flats, ranging from 7,300 sq ft to 16,000 sq ft, are priced between US$3.7 million and US$8.2 million. Buyers can start moving in by the end of the year.

With an estimated 38,000 NRIs and persons of Indian origin in Hong Kong, DLF has targeted the city to be its first priority international market because of its potential.

"Increasingly, a large number of Indian professionals are coming into Hong Kong, working in the service industry, banking and finance, information technology and shipping," said Aakash Ohri, senior executive director at DLF Home Developers, based in Gurgaon, 31km southwest of the capital New Delhi. "In fact, two of our current owners are from Hong Kong."

Other buyers include those from the US, UK, the Middle East, and Southeast Asia.

Expatriates consider property investments back home

During the lockdown period, DLF was still able to sell units worth "in excess of HK$100 million (US$12.9 million)" in The Camellias, the company said.

India's economy has taken a beating from the pandemic. The country has one of the highest Covid-19 caseloads with more than 2.8 million infected and a death toll of nearly 54,000 as of August 21. In the April to June quarter, the economy is expected to have contracted by 9 per cent, with the real estate sector among the hardest hit by the lockdown.

Savills said a recovery in India's property sector is likely to take place in mid-2021.

"While some investments may have been put on hold given the current uncertain situation, we believe this is only a short term pause as the inherent demand and growth opportunities in the country continue to remain intact," Savills' Nandan said.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.

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