NRIs home in as falling rupee makes realty cheap

MUMBAI: The spiraling rupee is resulting in a windfall for builders around the country who were struggling for more than a year to sell new homes.

In a three-day property show in Dubai last weekend, Indian builders were able to generate bookings for homes valued at over $50 million (around Rs 250 crore), which has prompted them to hop to other cities with large Indian population like London, New York and Singapore.

Ever since the rupee started depreciating there has been increased activity by the non resident Indian ( NRI) buyers as they pay in dollars. The benefits of the rupee depreciation, if added to the discounts being offered by developers, makes new homes in India cheaper by almost 30% in dollar terms. At the Dubai show, 70 companies including Unitech, Hiranandani Group, Vatika, Nirmal Lifestyle, Ansal Housing and Ireo showcased their 200 projects from Mumbai, Pune, Gurgaon and Ahmedabad.

"International real estate investment destinations, especially Europe and the Middle East are increasingly becoming uncertain. This, along with sharp depreciation in rupee, is attracting more NRIs towards Indian property markets," said Niranjan Hiranandani, managing director of Hiranandani group.

Since August, the Indian currency has weakened nearly 20% against the US dollar. This, in addition to developer and project specific discounts has provided benefit of 25-30% to NRIs who are considering this as a good bargain. "Dirham, the currency of United Arab Emirates, being fixed to the US dollar is also helping Indian property market receive more attention from investors and buyers from the region," Hiranandani added.

He expects the NRIs contribution in company's revenue to jump over 8% in the ongoing financial year, as against 3-4% earlier. "In three days most of the buyers have shown interest in paying the entire amount upfront to get the benefit of current currency rate. Of these, 53% people have booked these properties for own use while rest have bought with investment objective," said Sunil Jaiswal, chief executive of Sumansa Exhibitions, which organised the Dubai show.

The Maharashtra Chamber of Housing Industry (MCHI), the representative body of developers from Mumbai and the Mumbai Metropolitan Region, is planning to organize a property exhibition in Dubai between January 12-14. And developers, who are witnessing fall in sales volume from local homebuyers, are hopeful of a strong rebound from there.

The MCHI exhibition in Dubai will showcase around 300 properties developed by around 35 developers. "Prospects of sales to NRIs are bright this year, and therefore we are going to Dubai, London, Singapore, Doha and Hong Kong," said Zubin Mehta, CEO at MCHI. He expects the Dubai show to generate 15-20% higher bookings than last year's exhibition that saw bookings around Rs 70 crore and housing finance companies business at Rs 107 crore.

Source: http://economictimes.indiatimes.com/news/nri/nri-real-estate/nris-home-in-as-falling-rupee-makes-realty-cheap/articleshow/11175385.cms

Most unsold flats in city cost over `1cr

Soaring real estate prices are scaring away homebuyers in Mumbai. On November 3, HT had reported that the number of unsold flats in Mumbai has touched a record 32,000. It is now learnt that approximately 20,000 (68%) of these flats are priced at more than Rs1 crore. In contrast, a mere 2% are priced in the Rs25 lakh-Rs50 lakh range.These are the findings of Liases Foras, a leading non-brokerage firm that researches trends in the real estate market.

“It is more of a speculative market and rates are being quoted without any thought,” Pankaj Kapoor, CEO of the firm, told HT.

“To avail a loan for a flat costing more than Rs1 crore, the buyer should have a minimum annual salary of Rs20 lakh. Even people with such salaries find it hard, considering the high cost of living in recent months,” he said.

In addition, the Reserve Bank of India has tightened lending norms and also hiked interest rates on home loans, as a result of which many buyers have put off their purchase plans.

But builders defend the high realty rates. “Land prices in Mumbai are the costliest in the world and delays in permissions only add to the problem,” said Paras Gundecha, president, Maharashtra Chamber of Housing Industry (MCHI), the apex body of builders.

Sunil Mantri, chairman and managing director, Sunil Mantri Realty Limited, blames the government. “There is hardly any incentive to construct affordable units. Hence builders prefer to cater to the upper sections, from where they can make the maximum profit,” he said.

The MCHI has suggested a three-way formula to tackle the problem. “Higher FSI (Floor Space Index), faster permissions and lower interest rates will automatically reduce the rates,” said Gundecha.

Source: hindustantimes.com/