HOMEAGAIN - SURGE IN HOUSING DEMAND FROM RETURNING NRIS

THE BOOMING REAL ESTATE MARKET AND THE GROWING ECONOMY IS DRIVING NRIS TO LOOK BACK HOME FOR AN EVENTUAL ABODE. DEMAND FOR BANGALORE TOPS THE LIST OF PREFERENCES FOR HOUSING FOLLOWED BY CHENNAI, HYDERABAD, PUNE, MUMBAI, DELHI, GOA AND OTHER CITIES

There has been a perceptible shift in trends towards investment in residential property by expatriate Indians in the US. The booming Indian economy increase in disposable incomes and rise in salary levels on par with MNCs are driving the techies to seriously look at investment back home for an eventual return either now or in the near future. This is one reason why there has been a sudden spurt in demand for residential property in select Indian cities.

Yet another reason is the expansion of MNCs and corporates across Indian cities. This provides a rare opportunity for those keen to return especially when the request comes from parent companies with lucrative offers. Coupled with dwindling employment opportunities and soaring costs, returning NRIs are keen to invest in residential property for eventual returns either now or in the near future. All this has generated a large demand for housing.

A survey undertaken during the two-day India property show in the US at each location - Edison, New Jersey Dallas and Sunnyvale, California organised by the Chennai-based Priya Publications, reveals that the demand for the south Indian city of Bangalore tops the list of preferences for housing followed by Chennai, Hyderabad, Pune, Mumbai, Delhi, Goa and other cities. The increase in migration from states like Kerala has also supplemented the demand for housing in cities like Kochi.

The preference is for apartments in the price range of Rs. 35 lakh to Rs. 60 lakh. Demand exists for luxury apartments, villas, penthouses and developed plots. Those who have already invested are keen to commit more for additional homes especially with the development of integrated townships and housing built to international standards in Indian cities now. A majority of NRIs are keen to seek home loans for a repayment period of 10-15 years. With the repatriation facility now available for rental income as well, NRIs are keen to avail of this opportunity. The repatriation facility is available for up to two residential units after a lock-in period of three years.

Foreigners of non-Indian origin are evincing keen interest in investing in places like Goa. They are allowed to invest in one residential property with prior permission of the RBI by submitting the required information in the IPI form.

On the flip side is the lack of property management companies which is a major deterrent for large scale NRI investment. Unlike in the West and European countries, the concept of property management is yet to make a dent in India. There are similar services available but they are mostly confined to corporates and offered by international property consultants. On a retail level, such services are yet to gain momentum due to inadequate government support and fiscal sops.

Liberalized FEMA regulations like the repatriation of inherited/gifted property in NRO accounts and annual limits up to US$1 million have enthused NRIs/PIOs to increasingly look at reinvestment avenues within India rather than remitting sale proceeds overseas.
A number of NRIs are also looking at holiday homes in India. To this end, property developers are devising schemes with multiple investment options - so that NRIs can stay as well as earn lucrative rental incomes for the other days of the year.

A few investors are keen to plunge into commercial property investment preferably for leased properties. Fund managers and high net-worth-individuals (HNIs) are keen to commit money at the project level and expect an Internal Rate of Return (IRR) in the range of 20 per cent and above. They are also keen to commit to infrastructure development projects in select cities. Lack of information and data are major deterrents for large scale investment. Perhaps interactive seminars and sessions to apprise these individuals on the current development would boost the confidence level of investors especially at a time when foreign investors are keen to plunge into investment in various ¦ Indian cities.

Courtesy: ET, dtd: 27th Oct. 2007