The real estate market in India is still indicating positive trends in terms of available investment opportunities while the sector moves on strongly from the overall impact of COVID-19. The sales of both offices and residential units are steadily picking up with multiple measures being introduced by the Central Government for boosting the realty sector. UAE based NRIs have also been monitoring real estate trends actively since this sector is still a safe haven for investments made in both the short and long term.
NAREDCO President Dr. Niranjan Hiranandani has stated that expatriate Indians are finding more value in purchasing their own home, back home and this is way more than only sentiment in the current global economic situation. It is also a thoughtful and wise investment decision according to him. While the Indian economy has been impacted negatively by the COVID-19 pandemic and subsequent lockdown, it has been recovering steadily and real estate now offers a never before-never gain scenario for Indians living overseas. Several developers are providing buy to rent choices for expats along with attractive schemes for payments, making these opportunities too good to be missed. He also added that pricing will never be as attractive as it is currently with stamp duty concessions being given in States like Maharashtra. The global currency valuation vis-à-vis the rupee is another advantage for expats as per Dr. Hiranandani.
He also emphasizes upon how the regulatory environment after RERA has boosted overall safety and transparency levels for investors and buyers and with an improving economy over the last few months, the deadline is fast approaching to take advantage of the low property prices and other benefits according to him. He has opined that domestic purchases of residential units have been higher than the earlier year for the last four months of the year 2020. Property sales have been increasing consistently in several markets including the MMR (Mumbai Metropolitan Region) and Mumbai. This is a situation where overall advantages should be tapped now before they get over.
As per an expert analysis of performance in the office and residential realty sectors in India’s 8 key cities between July-December 2020 (H2 2020), it can be seen that home sales picked up by 10% (year on year) for the MMR to stand at 30,042 units. This can be majorly attributed to the cut in stamp duty while sales picked up from September onwards and grew towards year end. Sales in Q4 2020 increased by a whopping 80% (year on year). The State Government mopped up higher revenues owing to the stamp duty cut which also helped developers bounce back from the impact of the pandemic and buyers were also able to take purchase decisions faster. Home buyers in higher and mid income groups have tapped into the window for availing of lower stamp duty in the relatively costlier MMR markets and luxury real estate has also witnessed its highest jump for sales post the stamp duty cut. Experts testified to the long line of people at registration offices throughout Mumbai, waiting to get their deals closed prior to the first window of the stamp duty cut ending post December, 2020.
A cut in interest rates to record low figures, demand for buying bigger homes, several indirect/direct discounts from developers, higher household savings during the lockdown and the festive period of Dussehra-Navaratri-Diwali are other factors behind sales growth in real estate for the second half of 2020. Home launches came down by 25% (year on year) to touch 26,904 units in H2 although they jumped up by 121% to stand at 18,515 units in Q4 2020. Weighted average prices in MMR also came down by roughly 3.2% (year on year) to stand at approximately Rs. 6,787 per sq. ft.
The Founder & CEO at Square Yards, Tanuj Shori, stated that lower registration rates and stamp duty along with flexible payment plans, backed by corrections in prices of property spurred investments made in ready to move units. He added that these units offer secure rental yields along with future capital appreciation even in the present economic scenario. Shori also opined that commercial spaces such as IT Parks, Grade-A office spaces, REITs and logistics centers also offer more lucrative and sustainable alternatives for investments, offering rental yields till 6-10% on an average. He also talked of how there was a favorable mixture of the lowest ever prices of homes and currency rates which led to NRI investments burgeoning in the Indian realty sector. With personal finances impacted, NRIs may now select mortgage refinancing in India in case the difference between the rate of interest paid by them and the available rate exceeds 50 bps or 0.50%. NRIs who are not in India currently may provide power of attorney to someone living in India in a format acceptable to banks as well. Since interest rates are sliding downwards, NRIs should ideally choose variable rates tied to the RBI repo rate since there are further chances of rate cuts.
He also stated that variable interest rates will naturally be more affordable while NRIs will not be required to pay prepayment penalties on these loans in the future. With a bottoming out of the global economy, NRIs will find this the best time to park their surplus funds in Indian real estate as per Shori.
Published Date: January 26, 2021
