A depreciating rupee and the advent of a right policy framework are ushering in climate where the implementation of a bouquet of reforms and the putting in place of regulations that would spell a clear season for the real estate sector in the country to get on an upbeat path, and an attractive opportunity for non-resident Indians and people of Indian origin to invest into the sector … NRI Achievers takes a quick look at the scenario.
The recent approval of the Real Estate Regulatory Bill by the Cabinet and the sharp devaluation of the rupee is a bonanza for NRIs looking to invest in property in India for good returns. NRIs are a dominant segment of property buyers and some developers have been reporting hefty 25 percent sales of their projects by the NRIs. The steep depreciation of the Rupee has given a further boost to property demand by NRIs, who are making the most of this opportunity to invest in property. With 20 percent devaluation of the Rupee in the last one year, this is by far the best time for NRIs to buy property on the cheap, and they are simply lapping it up. Some newly launched projects in the NCR have seen as much as 60 percent bookings by NRIs.
Of late, NRIs have also been showing keen interest in Rupee deposits, especially after the RBI’s policy decision in 2011 to allow banks to offer high interest rate (at par with domestic depositors) on them. But now that the Rupee has sharply devalued against the US Dollar, NRI Rupee account holders are finding that interest earned on bank deposits in rupee terms gets offset when converted into dollars. As a result of this, it is beneficial for the NRIs to invest their money in real estate rather than putting it in a Rupee account, especially as property is now 20 percent cheaper due to rupee depreciation and developers are offering good bargains as well.
In this backdrop, the cabinet’s approval to the Real Estate Regulatory Bill has come as a booster dose for NRIs. The bill which is expected to be passed in the coming session of Parliament proposes to end malpractices, and ensure fair play and transparency in real estate transactions. The key provisions of this bill include compulsory registration of projects, mandatory registration of property brokers, disclosure of approvals and project plans on the developer’s website, and a ban on launching and advertising any project without all necessary approvals, mandatory disclosures in advertisements and prospectus, and no gap between promise and delivery, property sale on the basis of carpet area, thereby removing the ambiguity with regard to carpet and super area, restriction on fund diversion with mandatory escrow account, compensation for delays in delivery, obligation by developers to address quality issues after delivery, appellate tribunal for dispute resolution and imprisonment and penalty for non-complying developers.
After the passage of this crucial bill in the upcoming session of Parliament, the government proposes to bring in more reforms including the much needed single window clearance to cut project delays and price escalation, thereby making the entire process of property purchase more cleaner and transparent. Surely, a time for NRIs to rejoice.