AHMEDABAD: Contrary to the belief that the depreciating rupee will bring in investment from non-resident Indians (NRIs) into the real estate industry, Gujarat has seen up to 50% decline in investment by global Gujaratis this year from three years ago.
While the domestic market waits for a price correction, developers and property consultants said NRGs are treading cautiously considering the volatility of the rupee.
“The rates in Gujarat are still attractive for NRGs but they are rather cautious because of the volatility, policy paralysis and better prospects in other countries. Forget about new money, NRGs are now worried about the erosion of value of existing properties in their hometowns,” said developer Shaan Zaveri.
The rupee fall is considered an opportunity for NRGs to invest in the state, but most developers are getting inquiries only from NRGs who are shifting base.
Overall, investments in real estate by NRIs dipped by 30%, according to a report by the Confederation of Real Estate Developers’ Associations of India (CREDAI).
“In spite of the perception that real estate is at a discount, NRGs are less confident this time due to the continuous fall of the rupee. The industry is seeing 50% less investment this year compared to three years ago. A lot of NRGs invest in New Zealand and some European countries but not India due to the lack of transparency,” said Manan Choksi, who manages a real estate firm.
Relative to the rise of the dollar, investments or average enquiry levels have not increased.
As for the domestic market, developers said that there is a steep fall of 20% in demand for projects on the outskirts of Ahmedabad.
“The sentiments are bad and people are sitting on money, waiting for the market to improve. The domestic market is stagnant in spite of a 10-20% discount due to the slow economy. NRIs believe they will not get a return on investment in such an unstable environment,” Choksi added.
Builders are now wooing NRGs with attractive schemes and better prices.
Developer Deep Patel said, “The increasing rupee-dollar difference didn’t play out positively as the overall economic scenario globally is very volatile. Considering this, we recently launched an exclusive NRI/NRG sector in our latest project with superior amenities.”