Weak Rupee Makes NRIs Home In On Indian Realty

The latter half of 2021 and the following 2022 has been a rollercoaster for the global economies. Post the pandemic situation, be it the invasion of Afghanistan or the Russia-Ukraine war, money markets have been pivoting across industries. No different is the effect on the Indian Rupee. It’s interesting how the movement of specific indices has an impact on enterprises across the world. Let us understand how the weakening of the Indian Rupee has generated a buzz in the real estate market with rising demand

The Fall Of Rupee

According to a source from CNN-News18, the Indian Rupee has witnessed a volatile movement in 2022. The start of the year brought a fall of ₹4 where the Rupee stood at 77.72. A fall that started from ₹73.77 to a dollar, a value recorded on January 12, 2022. The movement had been a pendulum swing for a while before it saw a drastic fall in the latest April 2022. The question is, what is happening?
Just as we discussed, the effects on the Rupee had a lot to do with the geopolitical situation. The Indian currency has just been softening against the US dollar due to emissions of foreign assets prompted by worldwide difficulties arising from a geopolitical downturn involving the Russia-Ukraine conflict and the US Federal Reserve’s contractionary monetary policy. The drop can be credited to rising crude oil prices and the power of the dollar in a broad sense.

The Keen NRIs

Depreciation of the Rupee against the dollar in the backdrop of the economic situation and hardening global interest rates is helping drive sales of real estate to non-resident Indians. The rising interest from NRI homebuyers is being witnessed across segments, from mid-income projects to premium and luxury segments and plotted developments. An overall drop has been approximately 5.2% against the US dollar in 2022 so far.

“The economic scenario worldwide has thrown up various challenges (but) India comes through as a safe haven in terms of economic growth potential. Beyond just sentiments, Indian real estate is also a good wealth creation and growth option for NRIs.”

– Niranjan Hiranandani, VC of real estate industry body NAREDCO and Managing Director of the Hiranandani Group.

His idea is that the global currency situation translates into more square feet of Indian real estate for the NRI. Apart from being a safe haven in these uncertain times, Indian real estate also offers capital value appreciation and rental income. All of these, and the digitisation of the processes, add up to be a win-win scenario for the investors. Enquiries and conversion into actual property sales have improved in the last few months for many developers, especially the large ones with an established delivery track record.

A Demand Shift

“The depreciating Rupee is an opportunity for NRIs to invest in residential real estate in India. This is backed by the rising number of enquiries from multiple geographies, especially the Middle East. We are increasingly seeing that requirements are driven by their international experience and exposure,”
Said Ramesh Ranganathan, chief executive of K Raheja Corp Homes.

The West and the Middle East see an excellent opportunity to invest in the property markets in Indian real estate as the currencies fluctuate. These are the NRIs with occupancy of the Gulf and its neighbourhood. Several Middle Eastern countries with large Indian populations, like the UAE and Saudi Arabia, peg their currencies to the dollar. This means the Rupee has depreciated against them at a similar rate to the greenback.

“We are seeing a lot of traction from NRIs in the Gulf, which is traditionally a strong market for us”.

– Dhimaan Shah, chief operating officer of luxury holiday home developer Isprava Group.

Premium properties in tier-I and metropolitan cities like Mumbai, Delhi-NCR, Bengaluru and Pune, scenic destinations at hill stations and by the beach across India have been garnering rising interest from NRIs.

The traction flows here as the markets are evergreen across the country. For the metro cities, a rental funnel always prevails given the demand for housing in the established cities like Mumbai and rapidly developing peer metro cities. Apart from that, as the shared economy segment grows, properties in tourist hubs generate impressive cash flow in the peak seasons. Ultimately, the strategy is thoroughly backed by the overall momentum of compounded growth that the Indian markets produce.

The most fascinating aspect of the financial trajectory is the effects of contingent situations. Just as we can see how a negative impact on the national currency is actually fueling a particular market. The idea is simply interesting as to how the numbers and how a crisis can be leveraged to produce outputs on specific branches of our economy.