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Realty investment - advantage NRIs [Kuwait Times]
[January 05, 2014]

Realty investment - advantage NRIs [Kuwait Times]

(Kuwait Times Via Acquire Media NewsEdge) KUWAIT: With the GDP's growth rate at 4.80 percent in the first quarter and the rupee nosediving by 20 per cent so far this year against US dollar, NRIs are sitting pretty to derive maximum yield on their investment.  Money exchangers and bankers are reportedly seeing a spurt in remittance from the expatriate Indian community. The inflow is not only limited to making fresh investment but also minimizing home loan liability through prepayment options.  Housing finance companies and select banks are seeing NRI home loan borrowers minimizing their financial commitments.  Mid-size investment in developed plots is surging as is evident from the quantum of enquiries received by various land developers. A cursory glance at housing scenario in India will reveal the investment potential in real estate.  A technical group set up by the Ministry of Housing and Urban Poverty Alleviation has estimated that the housing shortage at the start of the 12th Five Year Plan (2012-17) was 18.78 million units.    Even after liberalization of FDI norms in real estate, not much headway has been made in mitigating the housing shortage in the country nor easing the norms to encourage more investment in housing.   Affordable housing has been given the boost by way of easing ECB norms and the World Bank allocating $100 million.  With soaring land prices and prohibitive infrastructure development charges, not many developers are evincing interest to develop such categories of properties.  There is a paramount need to offer more fiscal sops to encourage developers for affordable housing development. In this piquant situation, what is in store for investors in real estate sector?  Location and timing are essential ingredients.  Even in the aftermath of 2008 crisis, residential index rose across Indian cities except in a few cities.  There are of course specific reasons for the sluggishness in select cities like Hyderabad aggravated by the political imbroglio.

Time and tide wait for none, so goes the adage.  Similar is the case with real estate investment.  The reasons are not far to seek.  Every year, the state government is gearing up to mobilize additional revenue by way of hiking guideline values.  The petroleum price hike pushes the every associated sector.  Material, labor shortage and soaring land values have led to an unprecedented hike in the cost of construction to a level that small developers have downed their shutters. Housing is still not recognized as an industry while film industry has got the status long back.  With the result funds for real estate sector are available only at exorbitant rates as banks are not encouraged to fund developers but only with riders.  The worst hit in the whole scenario is the common man as he bears the brunt of all price increases. With the urbanization gaining momentum and suburbs bristling with activity, city apartments have now crossed Rs 1 crore mark in major cities like Bangalore, Chennai, Mumbai and NCR.  Even redevelopment work is raking in money for those lucky investors who had wisely invested in real estate decades ago.  Between concept and implementation, price appreciation in many residential projects ranges from 18 to 25 per cent. What additional factors have given a boost to NRI investment in real estate?  The availability of property management services in many cities for retail investors.  A few multinationals like LJ Hooker, Red Sky, Remax and Coldwell Banker have already set up shops across India and are in the process of appointing franchisees to expand their operations.  Industry sources say that Australian companies like Rockend has innovative and easy to use property management software, strata management software, document management software and trust accounting software. The easing of repatriation norms, decentralization in remittance through authorized foreign exchange dealers are major factors that should prompt NRIs to increasingly look at investment in real estate.  Whether it is for higher education, earn lucrative yield on investment, senior citizens homes' or living life in luxury, real estate is a better option and the earlier one gets into the bandwagon the better.  All said and done there is no denying that ground realities will have to be strictly adhered before plunging into investment.

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