Weak rupee, price discounts lure Gulf-based expat Indians to Indian property market in large numbers

The Indian property market is seeing a surge in buying interest from non-resident Indians (NRIs), especially from the Gulf region, lured by the falling rupee value and attractive price discounts offered by project developers across various states, industry executives said.

Eagerness to own a house back home in the wake of the pandemic-induced uncertainties is also adding to the current demand spike from NRI buyers.

The Indian rupee, trading at 77.71 INR per dollar on Wednesday morning hours, has depreciated over 5 percent against the US dollar in 2022 so far, in the wake of the geopolitical tensions involving Ukraine and Russia and the resultant crude price spike.

“There is at least a 10 to 15 percent increase in demand by the NRIs in the first five months of 2022 as compared to the corresponding period in 2021,” Santhosh Kumar, vice chairman, Anarock Group, a real estate consultancy operating in India and many of the GCC countries, told Arabian Business.

Gulf-based NRIs account for a large part of expat property purchasers in India due to issues related to long-term job prospects and residency visas in many Gulf countries, as compared to their compatriots in Western countries who generally get to settle down there with Green Cards or permanent residency permits.

Kumar said as per the latest Anarock research, the first quarter of 2022 saw housing sales of at least 99,550 units across the top seven cities, of which the share of NRI purchases was up to 15 percent.

The research also showed that an overwhelming majority of non-resident Indians (NRIs) – as high as 82 percent – now prefer to buy premium to luxury residential properties in their home country, a major change from the past when Gulf-based expat Indians mainly preferred low priced houses in the affordable category.

Industry analysts attributed this to the rising trend of work from home which demands added space and facilities.

Kumar said, as per the current trend, a vast majority of NRIs prefer to buy premium properties priced between $115,900 (INR9m) to $193,000 (INR15m), followed by luxury houses in the price bracket of $193,000-$321,700 (21 percent of expat buyers) and ultra-luxury houses priced above $321,700 (10 percent of expat buyers).

India
Santhosh Kumar, vice chairman, Anarock Group

Real estate company executives said another trend they have recently observed in NRI buying is that many of them want to purchase two houses – one in the city and the second outside the city.

“The pandemic and lockdown experiences have led people to be more cautious. If things get worse in cities, they want an alternative. The work-from-home facility has only added to this trend,” said a senior executive with a Mumbai-based real estate company.

The spokesperson for DLF, one of India’s leading realty companies, said post-pandemic, the Indian real estate sector has proven once again to be an attractive asset class.

“It [Indian property market] has gained the attention of both NRIs and locals alike. Gurugram – in the Delhi National Capital Region, which has some of the most exclusive residential and commercial real estate, has become one of the preferred destinations for NRIs. People from across the world want to invest in Gurugram because of its social and medical infrastructure, location, connectivity and vibrant communities which they are used to abroad,” the DLF spokesperson told Arabian Business.

In another trend reversal post-pandemic, a much higher percentage of NRIs now want to purchase houses in India for self-use, as opposed to purchasing property as an investment in the earlier times.

Several of the Middle Eastern countries with large Indian populations, like the UAE and Saudi Arabia, peg their currencies to the dollar. Image: Shutterstock

Kumar said the Covid-19 pandemic has increased NRIs emotional association of long-term security with physical assets.

“The depreciating rupee value translating into greater buying power, coupled with ongoing developer discounts and offers are adding to the lure of expats to acquire properties in their homeland,” he said.

Several of the Middle Eastern countries with large Indian populations, like the UAE and Saudi Arabia, peg their currencies to the dollar. This means the rupee has depreciated against them at a similar rate to the greenback.

An industry analyst said the NRI rush for acquiring housing properties amid the current lowest best prices offered by developers in some of the sought after Indian cities is also in anticipation of earning a decent ROI (return on investment) in future as prices are bound to increase.

Game-changing government policies like RERA (Real Estate Regulation and Development Act) and GST (goods and services tax) have also boosted confidence and transparency and streamlined the property-buying process for NRIs, industry observers said.

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