NRI Investments In Real Estate “A Dream Waiting to be Realized”

By Dheeraj Dogra MRICS “Global Realty & Retail Analyst” As I write this note watching the historic “Howdy Modi” rally in Houston with over 50,000 Indian Americans in attendance. I can say this by their sheer show of strength that Indian diaspora was never this close to India than its now. Now let’s look at the economics governing the Indian diaspora in monetary terms, estimated 30 million NRIs living in 130 countries and India retained the top spot in attracting overseas remittances, to a total $65 billion followed by China ($61 billion). That is just 25% less than the total Indian government’s plan expenditure. In essence, the few NRIs who are less than one percent of India’s total population put almost as much money in India as the whole of the Indian central government. “Houston, we have a problem”: As we face the biggest challenge in terms of unsold inventory in the Indian real estate, the Indian developers have failed in realizing the true potential of NRI’s investment into Indian real estate. The answer lies simply in the fact that the developers and their sales teams have failed to get a grip on needs, wants and aspirations of the diaspora. They have not spent enough time to understand what makes or breaks a deal for an NRI who are used to a totally transparent and hassle free way of business. Economic Advantage “RERA, Rupee Versus Dollar & Price Stabilization”: With the implementation of RERA the government has been able to bring in much needed transparency in the sector. With the dollar’s appreciation the buying capacity of the NRI’s is at a historic high. The prices in real estate which had escalated to unimaginable levels fueled by the investors have also stabilized in the last year post demonetization. All this gives the NRI’s a 20 to 25% advantage over a domestic client provided these economic benefits of investment are put across effortlessly to build confidence.   NRI’s seek convenience, personal attention without compromising their privacy: Nri’s are looking for a total solution provider and do not appreciate being passed on from one person to another for pre sales, sales or after sales. I propose the idea of a single dedicated relationship manager from start to finish including helping them rent out their property if so requested by them. Having said that NRI’s do not appreciate unsolicited offers for investments through phone calls or other mediums, privacy is held in high respect.   NRI’s Investments and Repatriation: The diaspora have some of the highest household incomes in the western world. However, despite of their resources they believe in taking mortgages. Using a home equity line of credit or a second mortgage lets the NRI’s borrow at a low rate of interest to finance their India real estate investment without affecting their liquidity. The information on laws governing repatriation in the event of sale of the property are not shared. Having attended several real estate road shows globally I have never noticed the sales staff representing the developers offering any solutions, may be simply because they themselves are not aware of it and were never trained to sell to the NRI community.   Take me home, Country Roads: No matter how much one loves living abroad, having a house back home in one’s own country gives a sense of belonging. • It allows them a retirement avenue (Summer in North America/Europe and Winter in India). A lot of professionals like doctors, engineers, scientists … who left India during the 60’s, 70’s and even 80’s are reaching retirement age and this is the time they long to stay connected both to their motherland as well as their adopted country. Real estate for us Indians has a cultural connect which is unique. Real estate in India is passed on from one generation to another. Continuing this legacy, they might want to leave something for the next generation so the next generation also stays connected to the roots.   Last but not the least, make no mistake “Phir Bhi Dil Hai Hindustani” is the mantra the diaspora believes in and practices. I say this with confidence simply because I am one of them. If done right the scope of NRI investments into real estate is just waiting to be achieved.