Track2Realty Survey: The global survey tries to understand the psychograph of the NRIs vis-Ă -vis the investment in Indian property market.
This may not be happy news for the scores of Indian real estate developers sitting over piles of inventory, and expecting the Non Resident Indians (NRIs) to end their sales drought. They are spending a fortune to attract the wealthy Indians from across the world. But the NRIs are just not ready to commit for real estate deals in India.
Nearly two third, as many as 64 per cent, categorically say they would wait for the market to have more clarity and transparency before making final their investment decision. The general mood among the NRIs is to play it safe now than be sorry with a wrong investment choice.
72 per cent of them are not sure how the Indian market has become more transparent in recent times beyond the publicity blitz of the government.
These are the findings of a global online and off-line survey by Track2Realty, the real estate think-tank group. Track2Realty conducted this survey online, and then its global alliance partners also conducted off-line sampling.
The NRIs from the US, UK, Middle East, South Africa, Canada, Australia, New Zealand, Malaysia, Singapore and Mauritius participated in the survey. They were given a mix of open-ended and close-ended questions to assess their investment choice in the Indian property market. The data was then collated by Track2Realty team to read the mood of the NRIs vis-Ă -vis their investment choice in the Indian property market.
â€śI read so many horror stories about the property markets of India on different social media outlets. I donâ€™t think there are very many positive stories about the Indian property market that would evoke confidence in me to invest. It is a question of investing a fortune and one should be better safe than sorry,â€ť says Govind Bhargava, an NRI from Canada.
The top reasons why NRIs are reluctant to invest in the Indian property market are:Â
Lack of transparency
Currency fluctuationÂ Â Â
Absence of due diligence
Low rental returns
Better options in other markets Â Â
Do they feel the market has more clean money and operations post the dmeonetisation? The opinion is divided but a substantial number of respondents, as many as 46 per cent, feel there is no tangible difference on the ground. When asked to be more precise about their concerns, a substantial number of Non Resident Indians, 74 per cent to be precise, say if the deal is not honoured by the builder the legal options are too lengthy and challenging to deal with.
Jessy Kutty, an NRI in Dubai says even if you bother your friends & relatives to verify the property back in India, the chances of getting a realistic picture is very difficult. Issues like lack of clear titles, timelines of delivery and mismatch in promise & product are being faced by most of the Indians.
â€śMy relatives in Kochi have burnt their fingers while purchasing their apartments for self use. This happened when they were physically present over there and knew the local market and the developer. My present job is such that I would not be even in a position to visit very often if the commitment turns out to be bluff,â€ť she says.
Nearly as many, 70 per cent, claim that if there is a proper due diligence mechanism they would explore investing into the Indian real estate. From a short to medium term outlook, the NRIs cite economic uncertainty to be the biggest deterrent to commit for a real estate investment back home. 58 per cent feel at present the Indian economy in general and the state of real estate market in particular does not evoke that much confidence.
Low rental returns are another reason that more than half the NRIs, 54 per cent, narrate as the reason why they donâ€™t see Indian housing market from the standpoint of investment.
â€śWhy to park money into a product that is not income producing asset; has huge risk involved in occupying it after having paid in advance; and then facing the challenge of its maintenance? Does it give that kind of sizeable return on investment the way it used to,â€ť questions Parag Dhavle, an NRI in UK.
Many of the NRIs who had thought of investing into the Indian property market a few years back are today evaluating the prospects after the weakening of the Indian currency. 64 per cent of the respondents feel the rupee is very weak and can turn out to be even weaker in the next few years; something that makes it a bad move to invest into the Indian real estate.
A large share of the NRIs are hence looking forward to other investment destinations outside their own country and city of birth. 76 per cent NRIs feel it is time to look at Dubai and the London properties as safer and cheaper investment options with the possibility of better returns ahead.
Time to buyâ€”22% Yes, 64% Wait for more clarity & transparency, 14% Not sure
Market more transparent now? 72% Not sure, 20% Yes, 08% Not sure
Why reluctant to investâ€”Economic Uncertainty, Lack of Transparency, Currency Fluctuation, Absence of Due Diligence, Low Rental Returns and Better Options Elsewhere
Demonetisation effectâ€”46% No tangible difference, 28% More Clarity, 26% More time needed
Legally safeâ€”74% No, 18% Yes, 08% Not sure
Seamless due diligenceâ€”70% Ready to invest, 20% Better trust, 10% No difference
Trust on Indian growth storyâ€”58% Not sure, 22% Yes, 20% Depends
Rental yieldsâ€”54% Too low for investment, 32% Competitive, 14% Satisfied
Currency trustâ€”64% Indian currency weak, 18% Short-term pains, 18% Weak rupee not a deciding factor
Competitiveness of Indian marketâ€”76% Time to look at Dubai & London, 16% Better to wait, 8% Time to investÂ