Tag Archives: NRI investment laws

Developers failed to understand NRI buyers?

Posted on by Track2Realty
Track2Realty Global Survey

Track2Realty Survey: The global survey tries to understand the psychograph of the NRIs vis-à-vis the investment in Indian property market.

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 investment, NRI property management, NRI property management services, NRI due diligenceThis 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-à-vis their investment choice in the Indian property market.

“I read so many horror stories about the property markets of India on different social media outlets. I don’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,” says Govind Bhargava, an NRI from Canada.

The top reasons why NRIs are reluctant to invest in the Indian property market are: 

Economic uncertainty

Lack of transparency

Currency fluctuation   

Absence of due diligence

Low rental returns

Better options in other markets   

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.

“My 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,” 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 don’t see Indian housing market from the standpoint of investment.

“Why 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,” 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.

Survey Highlights

Time to buy—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 invest—Economic Uncertainty, Lack of Transparency, Currency Fluctuation, Absence of Due Diligence, Low Rental Returns and Better Options Elsewhere

Demonetisation effect—46% No tangible difference, 28% More Clarity, 26% More time needed

Legally safe—74% No, 18% Yes, 08% Not sure

Seamless due diligence—70% Ready to invest, 20% Better trust, 10% No difference

Trust on Indian growth story—58% Not sure, 22% Yes, 20% Depends

Rental yields—54% Too low for investment, 32% Competitive, 14% Satisfied

Currency trust—64% Indian currency weak, 18% Short-term pains, 18% Weak rupee not a deciding factor

Competitiveness of Indian market—76% Time to look at Dubai & London, 16% Better to wait, 8% Time to invest 

Reality of online property deals by NRIs

Posted on by Track2Realty
Track2Realty Exclusive

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