The rapid depreciation of rupee in terms of US dollar has been one of the major reasons for NRIs living in countries like the US showing major interest for investing in real estate. With the city of Mumbai being one of the booming realty markets, the interest in the city has been high.
The Maharashtra government has already taken steps to ensure that the growth of the real estate sector in the state is not hampered in any way. It has appealed to the Planning Commission to introduce ‘National Projects for Mega Cities’, which will help to boost the real estate sector in the state.
The increasing investment in real estate could be seen as a positive step- one that could boost the country’s sluggish GDP growth. According to Shobhit Agarwal, joint managing director – Capital Markets, Jones Lang LaSalle India, “Over the last year, there has been an unequivocal crystallisation of Indian cities that continue to attract serious investment into real estate. This is directly correlated to the economic dynamics now working in the country. If India is to achieve even a conservative GDP growth of 6% per year, it emerges that only three cities – Mumbai, Delhi and Bengaluru – have the potential to deliver.”
Commenting on the increasing demand of Mumbai as a preferred destination for investment, Anuj Puri, chairman and country head of JLL says, “Mumbai has a deeply-ingrained work culture, of a magnitude that rivals Manhattan and Tokyo. As such, its citizens tend to attribute ultimate location value to homes that are within reasonable commuting distance from their work places. The key concept here is ‘reasonable', and must be seen in context with the legendary intra-city accessibility challenges that this city faces.”
Moreover, with the value of rupee depreciating by nearly 23% over the last 6 months, NRI investments were really bound to go up significantly.
According to Debalina Mukherjee, a US resident, “The value depreciation has really been major news. For us it is a profitable prospect because now we have to pay lesser in terms of dollar for acquiring an asset that is being valued in terms of Indian rupee.”
The confidence level has also increased over a period of time with most NRIs earning and still continuing to earn high value for their investment. Investors feel that even though the prices of properties in major metro cities like Mumbai and Delhi has not receded substantially, the appreciation of investment in real estate in these cities have been higher.
Real estate developers across the country will see this growth in investment as a positive step as it will allow them to earn value for their money. Multiple factors like high interest rates, funding and financing of high value projects, delay in getting regulatory approvals and the overall volatility of the market have been contributing hugely to generate a sense of lull in the market.
However, with money coming in from foreign countries like the US, UK and other major markets, the situation is expected to improve soon.