Falling rupee might have given nightmares to the Finance Minister, RBI Governor and the India Inc in general but not to the Realty sector. In fact, the Realtors see a silver lining among the dark clouds of rupee depreciation vis-à-vis dollar. Realtors feel that rupee depreciation may rekindle interest among NRIs and foreign investors in Indian realty sector which is facing stagnated demand since last few quarters.
The rupee hit a lifetime low of 68.85 against the dollar on 28th August as the oil price started its upward journey on the backdrop of heightening tension in Syria. Also there is increasing worry about the current account deficit and capital outflows.
“Falling Indian Rupee has created a major concern for the country’s economy, however the fast declining of rupee value excited NRI buyers to take an advantage to buy real estate properties across various locations,” says Manju Yagnik, Vice Chairperson, Nahar Group. According to Mayur Shah, Managing Director, Marathon Group, time is ripe for investing in real estate for the NRIs. “They would get properties 15 % cheaper due to the increased dollar rates” he said. Diipesh Bhagtani, Executive Director, Jaycee Homes also concurred with other experts of the industry. “It is expected that real estate sector will see a surge in demand from foreign investors till rupee stabilizes” he added.
According to Diipesh “they (NRI buyers) have already started hunting for a good deal in the market mostly in the mid-ultra luxury segment”. A typical house purchase transaction usually takes a period of a month to 3 months. During this period, if the rupee strengthens, the notional advantages that could accrue due to the rupee’s depreciation could be lost.
According to realtors enquiries from overseas are expected to go up in the coming days. “Realtors are expecting an increase of 35% in business enquiries from the expatriates this year” says Mayur Shah. But some experts feel that logistical constraints like locating good property and negotiating a deal may act as speed breakers for them. Also those who go for outright purchase may be at an advantageous position as compared to those who opt for under construction property for which payment is spread over a period of time coinciding with construction period.
However, on the domestic front situation is slightly gloomier. Falling rupee may have its impact on interest rates and in fact many housing finance companies are thinking in terms of increasing the home loan interest rates. “The fall in rupee prompted the key housing finance providers to increase their home loan rates making home buying for the common man bit a difficult” says Manju Yagnik. Increased interest rates may dampen the spirit of many home buyers on the domestic front, especially during the festive season which is about to begin.