Falling rupee: Impact on real estate and NRI investment
The depreciation of the rupee provides a psychological boost to both NRIs and developers. Though it is commonly felt that with each depreciation cycle, NRIs will find it cheaper to invest in real estate in India.
June 29, 2013 / 16:37 IST
Shveta Jain
Cushman & Wakefield
The depreciation of the rupee provides a psychological boost to both NRIs and developers. Though it is commonly felt that with each depreciation cycle, NRIs will find it cheaper to invest in real estate in India. They will have more money to invest in the local markets as inquiries go up and developers concentrate their marketing efforts to attract more NRIs. This does not happen immediately. Also read: Roller coaster week: Joy ride for Sensex, nightmare for rupeeThe primary reason; there are logistical constraints such as identifying the right property, negotiating a deal, being able to repatriate large sums of money in outright purchases, completing all the necessary documentation and formalities, etc during the transaction lifecycle. A typical purchase transaction may take a NRI buyer a period of a month to up to 3 months. During this period, the rupee may strengthen and the notional advantages that could accrue due to the rupee’s depreciation could be lost. This could get further compounded, if the purchase is not outright and the NRI buyer needs to either pay in installments or he is booking an under construction property as again there is no guarantee that he will continue to enjoy the benefits of a depreciated rupee during the payment lifecycle. In the short term, the depreciation of the rupee may mainly benefit those buyers who are already in the process of finalising an existing transaction where they have still not converted their foreign exchange in to rupees to pay for their purchase. However, if the rupee maintains its current levels, developers could see more interest from NRI buyers as long as the capital value levels are also maintained and do not see a big hike during the period. At current rupee levels and sluggish market conditions in many markets that are expected to remain for the next few months, NRIs could possibly benefit substantially from some attractive options available in the markets. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
