The Indian realty sector has been on a roller-coaster ride since the past several months and the recent demonetization drive has only added to its woes. Much to everyone’s surprise, the realty stalwarts have collectively hailed the move as far-sighted and long-term sustainable. This drive, they feel, will have its short-term repercussions in the form of lower sales volumes but in the long-run the sector will become more transparent, professional and organised. Also, it will go a long way in attracting foreign investors into India who have been on the back foot owing to the unorganized nature of the sector.
Win-win situation for NRIs
The NRIs, who have been an integral part of realty investments in India, are likely to be the least affected by this drive and can surely rejoice. The Indian realty sector is poised to become more transparent and all major dealings in ‘cash’ will now become a thing of the past.
In fact, the move will benefit those NRIs who have to sometimes convert their white money into black so as to buy a home of their choice. This is mainly so because few small developers insisted on some portion of cash transactions. But, going forward, this situation may not persist. All dealings will be done through cheque or online transfers, thereby making it much more convenient and easy for NRIs.
Furthermore, the ‘surgical strike’ against black money is least likely to impact the sales volumes of NRIs in the Indian realty market. Improved market conditions will only strengthen their belief and attract more investments into the realty sector.
Add to this, property prices are likely to see corrections in anticipation that banks will lower the home loan interest rates due to increased liquidity with them. This will invariably prompt more and more buyers to avail home loans to buy their dream home and thus heighten the real estate activity. NRIs can also avail the benefits of lower property prices.
Tier 2 and 3 cities
Other major positive impact of demonetization is likely to be seen in the volume of investments that the NRIs make in Tier 2 and 3 cities across the country henceforth. Earlier, several NRIs refrained from investing in smaller cities and towns because in several instances there was little transparency and professionalism. Ultimately, NRIs invested with reputed builders in metros where the market was more stable.
But now with increasing transparency and professionalism across the country many would be able to invest in their native towns and cities, also their first preference. This will also give a major push to the real estate activity in Tier 2 and 3 cities. Some of the regions which have seen high real estate activity by NRIs in the past include Kerala, Karnataka, Delhi-NCR, MMR and Tamil Nadu.
All said and done, NRIs are in a win-win situation as far as pricing and good product is concerned. With RERA into effect, their interests are further safeguarded even while they are sitting in faraway countries. A slew of other government initiatives including the ‘100 Smart Cities’ mission and clarity on REITs are only making the real estate investment scenario more lucrative for NRIs in the long run.