Tag Archives: Non Resident Indians

NRI investment pattern changing in real estate

Posted on by Track2Realty
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Bottom Line: NRI homebuyers are getting more and more realistic in the housing market of India.

NRI, Non Resident Indians, Indian Diaspora, PIO,  Persons of Indian Origin, NRI investment in India, NRI investment in real estate, NRI investment in property market, NRI investment pattern, Where are NRIs investing, India real estate news, Real estate news India, Indian realty news, Indian property market, Track2Realty, Track2Media Research When Alka Rajpurohit, an NRI from Dubai told the local property agent in Delhi-NCR that she would like to sell their luxury apartment in Gurgaon and instead wants to buy a premium apartment in Noida, the broker was surprised. However, this has not been first such request and the broker soon realized that the market dynamics of NRI investment into the Indian property is changing.

From NRI investors and speculators to future end user buyers, the NRI investment pattern has taken a tectonic shift. Moreover, no one is nowadays investing into ultra luxury property or saturated locations. Mid-segment apartment in relatively affordable markets are very much in demand.

Take the case of Arjun Parihar, an NRI from Boston who is now returning to India and has already invested in a mid-segment apartment in Ghaziabad. Though a native of Ghaziabad, his choice is governed by the economic fundamentals than nostalgia of home city.

“People think we make lots of disposable money, but life is not that easy for us in foreign countries. And if I invest in a plush luxurious apartment, then my finances will not allow me to start my business here. What will I do with luxury apartment but no source of livelihood,” says Parihar.

NRI realities

95% NRIs are employees & wage earners and can’t afford luxury property in India

Rich NRIs have burnt their fingers or learnt with experience of peer group to avoid luxury

Small ticket investment gives better exit option & rental returns

Job insecurity globally forcing NRIs to be realistic in housing investment back home

As per the data available with Track2Realty, the Malayalese and other South Indian NRIs are nowadays investing into Kochi and Coimbatore than Bangalore or Chennai. Gujarati NRIs are investing into Ahmedabad and Vadodara than Mumbai. Mumbai-born NRIs are investing into Pune and Nashik than Mumbai. North Indian NRIs are investing into Noida and Ghaziabad than Gurgaon. One common thread into all these investments is scaling down of property segment – from ultra luxury to mid-segment and premium housing.

Kaizad Hateria, Brand Custodian & Chief Customer Delight Officer, Rustomjee Group agrees that nowadays in majority of the cases the clients who buy luxury and super luxury properties are end users. Every end user does not have budget to invest in luxury or super luxury property developments.

“Self employed segment of NRIs are more focused to have investment portfolio of different projects instead of putting money in large size developments. They plan to divide their money among various small ticket size projects where they can sell easily if they want to or they can fetch good amount of rentals from various investments done,” says Hateria.

Manju Yagnik, Vice Chairperson, Nahar Group points out that there has been a trend among the NRI community to invest in the Rs. 60 lakh to Rs. 2 crore in properties depending on their social strata, as this looks to be an attractive and safer option to invest. Most of the affordable luxury housing projects are found in this price bracket in metro cities like Mumbai with high appreciation in long run. Currently the NRIs prefer not to take a risk by investing in super high-ticket size projects, as market is not as buoyant in this segment.

“NRIs also like to keep the option of exiting open based on the movement of the global economy. A project with large ticket size comparatively takes longer time to liquidate, if required in future. NRIs over the years have been investing in property, but mainly across metro cities of the country as it ensure them the lifestyle they are used to and appreciation value and healthy returns,” says Yagnik.

Does it mean that the luxury and ultra luxury properties will no longer attract the NRIs? The opinion is divided among the analysts but everyone would like to agree that the days of speculation driven investment is over. Many of the NRIs who had invested into some of the most luxurious properties in Gurgaon, Mumbai or Bangalore are today stuck up.

Contrary to the myth, all the NRIs are not necessarily rolling into big money. The fact of the matter is that 95 per cent of the NRIs are employees and wage earners.

A survey conducted by Pravasi Bandhu Welfare Trust, a Dubai-based non-governmental organisation working for bettering the lives of Indian workers in GCC countries, finds that a whopping 95 per cent of NRIs in the Gulf do not save anything and return empty handed to India even after working for a decade. Only 5 per cent of the Indian labour force including the white collared manages to have some decent saving.

The study finds that only 10 per cent of Indian workers in GCC nations live with families, a majority of them fail to save sufficient money due to low wages and high cost of living.

Obviously, all NRIs are not super rich, and those who are have either burnt their fingers with ultra luxury or have learnt from the mistakes of their peer group. And hence, the NRI housing demand nowadays reflect the grounded realism; something that augurs well for the housing market as well since the speculative NRI buying is over and end-user market is fast evolving. 

By: Ravi Sinha

Reality of online property deals by NRIs

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News Point: Online property search & buying by the NRIs might be a reality, the digital medium still has not scaled up to the level of providing seamless solutions to expat Indians.

NRI Online, NRI property search, NRI online property, NRI property investment, NRI laws, NRI buying property, NRI investment in India, India real estate news, Indian property news, Track2Media, Track2RealtySome facts that suggest the trend of online property search and buying has grown significantly among the NRIs:

Tata Housing claims it relies on online sales by NRIs & HNIs; sold a villa worth Rs. 5.5 crore online

Google’s Great Online Shopping Festival attracted many NRIs buyers

Majority of the NRI buyers connecting to developers directly through online ads 

These facts clearly illustrate that the digital medium is the best source for the NRIs to connect with the Indian property market and buy it online. Of course, even with a keen interest in the Indian property market it is not possible for them to physically come and see the property back home. The developers are hence nowadays increasing their online presence.

From online presence to virtual tour of the property, and digital advertising to sponsored games & other connecting platforms, the developers are not leaving any stone unturned to touch base with NRIs.

But the question that still stands is that to what extent they manage to communicate & connect. Whether the online flow of information and connect leads to sales transactions strictly on the basis of project being showcased in the virtual world? Can Online Reputation Management (ORM) of the developer and review of his property by existing buyers is being taken at the face value?

NRI Myth & Reality

Online search is first point to communicate & connect for NRI homebuyers

Developers are using online ads, virtual property tours, augmented realty, ORM and sponsored games to touch base with NRI buyers

NRIs cross check online searches with local contacts, friends, family & peer groups

A local agent is needed for hand holding and cross verification

Manju Yagnik, Vice Chairperson of Nahar Group says online communication is the need of the hour as the NRI community relies heavily in the online space for their home buying in India, as it is not physically possible for them to inspect the property, considering they are based abroad. They use the Internet as a medium to check the property and connect with the developer. Developers on their part connect with the Indians living abroad through the same media due to convenience and easy accessibility.

“This is also a very cost effective way of creating awareness about your offerings and most importantly reaching out to a wider global audience. The Internet also offers developers an opportunity to showcase their products to customers across the international markets with virtual reality and augmented reality tour of the project. Digital medium not only provides a complete insight of the project but also can show you the actual apartment from inside along with furniture placement and with options,” says Yagnik.

Kaizad Hateria, Brand Custodian & Chief Customer Delight Officer, Rustomjee Group adds that once made their mind what the NRIs do first thing is to Google for having an understanding of Indian property market and from there they find contacts of various property development companies and channel partners.

“Once they register their interest on any website then only their education starts for different locations, developments, companies etc by phone calls and meetings done with various property advisors & consultants available in different countries and regions. Even after closing transaction they rely on online searches, local property advisors and consultants to follow up on investments made,” says Hateria.

However, Nikhil Hawelia, Managing Director of Hawelia Group has a caveat here when he says that online exposure is effective medium only for communicating & connecting with the NRIs. This is first point of information and definitely not the most important criterion to choose a specific property.

“With my experience in dealing with the NRI buyers, I must say that normally their online leads get translated into sales only if there are friends, family or peer group to endorse the project and the developer. Online advertising or Online Reputation Management is not enough to freeze the deal. Once they finalise the deal basis the recommendations then also they need a local agent for hand holding,” says Hawelia.

Well, the dynamics of property hunt may be similar to what the resident Indians have, but the online penetration and impact has suddenly grown over the last few years. The Internet savvy generation of today takes to social media in a big way and therefore developers do all possible for the online presence and manage their reputation in the cyber world.

But at the same time they also need the local channel partner who can advise the NRIs on the brand, the past performance of the developer, actual projects as against the digital and virtual promises, various property options available to him considering his budget. Most importantly, the NRIs need a local contact who could help in making an informed decision considering infrastructure projects, connectivity and social infra available in and around the project.

By: Ravi Sinha

 

Mumbai property on top of NRI’s wish list

Posted on by Track2Realty
Track2Realty Exclusive

News Point: The demographic profile of the Non Resident Indians (NRIs) may not do justice to conclude why Mumbai is always on top of the wish list of the expat Indians.

NRI, Non Resident Indian, Indian Diaspora, NRI investment in property, Property market for NRIs, India real estate news, Indian property market, Track2Realty, Track2Media, Indian Diaspora investmentThe major demographic profile of the NRIs is from the states of Gujarat, Kerala, Punjab and other parts of North and South India. Going by what the traditional investment pattern of the Indians, the cities that should draw the maximum NRI investment should be Kochi, Ahmedabad and Chandigarh. But then it is the Mumbai city that has over the years commanded the maximum premium from the NRIs.

The slowdown of the Indian economy and the resultant effect on the property pyramid where the high-end investors started scaling down their portfolio size gave the impression that the NRIs who were fuelling the luxury property of Mumbai would be skeptical with the dream city. However, this proved to be an outside view as the NRIs who have travelled in developed cities of the world still find opportunity cost of Mumbai pretty high. In their cost & benefit analysis, Mumbai continues to be an investment magnet.

Critics who pointed out that the NRIs are exiting the luxury properties probably failed to differentiate between the NRI investors and the NRI end users. It is true that the investors are wary of ultra luxury projects across the country and Mumbai is no exception. But equally true is the fact that the kind of business opportunities, lifestyle and livability index that the NRIs looking to settle down in India want, no other city can match their aspiration level as Mumbai.

Mumbai magnet for NRIs

Mumbai a top pick among the NRIs professionals; retirees prefer hometown

 Mumbai still offers the maximum ROI on property investment

No other city offers the NRIs quality of life and business opportunities like Mumbai

Connectivity of Mumbai with other global cities act as a magnet for NRIs

Satish Dwivedi, and NRI from Western Uttar Pradesh now working in Yemen is coming back to India. The financial consultant was advised by the broker that Noida is a better option for settling down in India and exploring his business. The ticket size of the Noida market is not even 30 per cent of the Mumbai real estate and hence the advice prima facie looked very convincing. In terms of the cost of doing business per square feet, Noida was peanuts compared to Mumbai.

“With the impression that I was given I was pretty much convinced in favour of Noida since it is very close to my home town in Moradabad. The physical infrastructure of the place also is far superior. But then I soon realized that it could only be my retirement destination. In terms of conducting my professional and social life, no city can match Mumbai,” says Dwivedi.

The built environment of Mumbai real estate that deals with the NRI buyers do understand this wish list of the expat Indians. “The first consideration for any home-buyer is how will he conduct his professional life. Then after he has to look for conducting for social life. Then comes the question of budget and affordability which is very relative. For the NRIs since there is no budget constraint like an average salaried class in India, they would go for a city where they get the lifestyle choices along with professional opportunities,” says Arvind Nandan, Director – South Asia with Colliers International.

Ravi Gurav, Member of MCHI points out that Mumbai real estate market has been getting some good support from NRI sales since the last two years. The share of enquiries by NRIs on real estate portals are over 30 per cent in today’s times. Whereas the local buyers are still considering the property prices as high, at the same time NRIs are buying the best deals available from Mumbai market. From the month of August 2016 we are witnessing a lot of new launches along with existing launched properties offering better deals with relaxed payment schedule or free biz such as furniture and home appliances.

“NRIs are especially bullish in Mumbai real estate market due to two reasons. First is that they understand the gradual correction that taken place in Mumbai real estate market. Even if we consider the inflation from 2013 to 2016 at the rate of 5 per cent per annum then overall inflation is 15 per cent in last three years. But if we get the property in 2016 at the price of 2013 means it is at 15 per cent correction. Secondly, Indian Rupees against US Dollar depreciated almost 20 per cent from 2013 to 2016. The Indian Rupee against US Dollar was 55 in April 2013 where as in April 2016 India Rupee was 66 against US Dollar. Which is like the 20 per cent depreciation of Indian Rupee against US Dollar,” says Ravi.

As per this calculation, if we consider the consolidated effect of 15 per cent gradual correction and appreciation of US Dollar up to 20 per cent in last three years, it is as good as Mumbai real estate market poised at 35 per cent corrected price for NRIs and hence they are bullish.

Devang Trivedi, Managing Director of Progresive Group finds a sound financial rationale in the Mumbai property investment of NRIs. He points to the fact that the NRIs are used to low returns on investment in their country. So, in Mumbai rental income is equal to the appreciation in their country and whatever appreciation in property price rise they are getting is a bonus. Moreover, they have a long term option of returning to Mumbai  and have a self use option.

“Among all the different investment classes that is gold, silver, diamond & stock market, property investment is the most tangible & common sensible investment. Long term perspective in Mumbai remains a safe market because of limited supply  and ever increasing population. Ten times growth in Mumbai between 2003 and 2008 is giving encouragement to all the NRIs to invest in Mumbai, as back in their own country the property is the same with only 2 to 5 percent maximum growth,” says Trivedi.

Beyond all the cost & benefit analysis, the fact lies that Mumbai still offers the high livability index and the reasonable cost of doing business to NRIs. So, any NRI who is returning back to the country and wants to continue the professional life prefers Mumbai for investment. Despite the slowdown of the last few years, which has hit the property markets across the country, everyone understands that in terms of the ROI no city can match Mumbai. Add to it, the quality of life and the business opportunities, and Mumbai acts as a magnet to the NRIs. Last, but not the least, the kind of connectivity that Mumbai offers to all the major international cities is a magnet for NRI professionals returning back to India to set up business here.

By: Ravi Sinha