Rekha Parihar, a non-resident Indian (NRI) from Dubai, had finalised the purchase of a luxury sea-facing apartment in Worli, Mumbai. However, when she surfed the internet to check the credentials of the developer and the project, she came across several negative reviews among other positive stories. “My friends in Mumbai assured me that it was common for a few disgruntled buyers, to post extremely negative comments in this free-for-all medium. For such a big investment of Rs 22 crores, I wanted to be thoroughly assured though,” she recalled. A confused Parihar finally cancelled the deal, as she could not travel to Mumbai to find out the truth.
Parihar’s experience reflects the lack of a platform for due diligence that can be trusted by buyers and NRIs, in particular. However, Manju Yagnik, vice-chairperson of the Nahar Group, maintains that the Indian property market is much more transparent today, than it was a decade ago. “NRIs prefer to buy from reputed developers. In most cases, the NRIs also have relatives, who help them in executing due diligence. Moreover, information is more widely available today, than it was some time ago,” says Yagnik. Generally, reputed developers, who have a good brand name and track record, highlight all important documentation and information pertaining to the property, including the permissions granted by competent local authorities for their projects. This helps the NRIs to take an informed decision.
See also: NRI investments in India: The essential checklist
Information that NRI buyers can’t find easily
Kaizad Hateria, brand custodian and chief customer delight officer, Rustomjee Group, admits that the NRIs settled in the GCC (Gulf Cooperation Council) and other tax-free countries, are not very familiar with certain regulations. Many of them either have no idea about the taxation part, or get very confused when it comes to tax calculations. While information on developers’ projects is often easily available, with a lot of focus on offers and amenities, there is a lack of transparency, vis-à-vis certain government regulations, taxation, etc., until a buyer specifically asks for it.
“One negative customer has a potential to make several potential clients lose interest. It may not be possible for an NRI to visit the project frequently, to track his investment. Hence, they expect transparency, in each and every minute detail,” says Hateria.
Lack of honest information
Nikhil Hawelia, managing director of the Hawelia Group, feels that it is not just the information gaps, like taxation, etc., that deter NRI buyers. According to him, another problem is the absence of reliable third-party due diligence centres, as most of the due diligence is being done by the industry stakeholders.
“Brokers and channel partners are paid by the developers and they are our voice. Most of the listing agencies are being provided the information by us and there is no mechanism, to filter what is a legitimate claim and what is a marketing gimmick. Over and above that, there are vested interests among the buyers, who can spoil the credentials of even the best projects, through the internet,” says Hawelia.
In a nutshell, the Indian real estate sector, is yet to reach to a level of maturity where there is authentic due diligence, in the form of a third-party and neutral platform for home buyers. This problem is only made worse, as developers’ remain reluctant in unanimously welcoming a critical review platform, which, in the long run, could lend credibility to the right kind of projects.
Why NRIs remain sceptical about Indian realty
- Due diligence is a critical missing link for NRI home buyers.
- Most of the information in the public domain, is from the industry’s point of view.
- There is no universally accepted due diligence mechanism, for the housing market.
(The writer is CEO, Track2Realty)
Ravi Sinha is a journalist with nearly two decades of cross-discipline media exposure. He is the CEO of real estate think-tank group Track2Realty. He has been writing extensively on the real estate sector for nearly a decade. Evaluation of real estate brand performance is his expertise and he has immense insight into consumers’ psychograph in the property market.
Twitter: https://twitter.com/ravitrack2media
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