Now, NRIs shy away from realty market as Gulf region sees slowdown
MUMBAI | BENGALURU: Nonresident Indians, a key category of property buyers in India, have of late been keeping away from the realty market. Kerala is worst affected, with a more than 50% drop in sales to this group, according to global real estate consultant Coldwell Banker. Ahmedabad, Surat, Vadodara, Bengaluru, Mumbai, Pune, Hyderabad, Gurgaon and Noida have seen around 20% drop in demand annually in the past two years. The decline is being attributed to a general slowdown in the Gulf that has significantly reduced NRIs’ disposable income.
A weak rupee is a concern too because it makes the actual return on investment lower for NRIs, though it improves the buying capacity. As the property market matures, the upside or investment returns are tend to become lower than they were five years ago, said Ramnik Chopra, managing director of Coldwell Banker India. “This, added to currency fluctuations, has increased risk of actual returns for buyers,” he said. “Significant delays in property delivery also make NRIs very nervous.” Investments from West Asia, which contribute significantly to Kerala’s property market, has been hit due to job rationalisations and slower economic conditions in the Gulf.
According to a senior vice president of marketing at a leading Kerala realty firm, as much 70% of property buyers in Kerala used to be NRIs in the Gulf. Sales to that category has now nearly halved, he said. “Investors are not taking big risk any more. We had sold 30 units a month, now it is down to 11. NRIs are reluctant to take long-term housing loan.” Builders who made houses costing .`1 crore and more in Kerala are now focusing on homes for the middle income group to attract local buyers. Quality of client servicing and construction is also contributing to lower interest among NRIs and people of Indian origins for properties here, say sector experts. Developers primarily focus on sale but not on after sales or customer service, which means NRIs don’t get the kind of service they are used to in their host countries.
“It is not that developers are trying to mislead clients (though some do that). In most cases, developers are just not set up to help clients manage property investments remotely,” said Chopra, who has been working on cross-border business relationships, sales channels and new growth opportunities for clients between India and North America. “Developers offer the same service to an NRI that they would offer to a client who would walk into their office… need of an NRI is fundamentally different.”
According to him, developers or sellers will have to make it easier for clients to buy property. Make the process transparent, customer service professional and paperwork simpler, he said. Developers should also provide some kind of concierge service to handle property-related tax matters and obtaining tax certificates for sales. In some cases, it takes weeks for clients to get a simple payment receipt of monies they remit towards purchase. Local brokers, who usually connect with NRIs through their relatives here, are also facing a decline in sales enquiries.
“Nearly 10% of brokers’ business used to come from NRIs two years ago. Now it’s less than 5%, that too with very high efforts,” said Yashwant Dalal, president of the Estate Agents Association of India.
Source : ETRealty