First, the good news: The outlook of expat Indians towards Indian real estate is changing for the better. Recent policy reforms have made them more optimistic about the property market back home. However, the bad news is that they are not yet ready, to commit to property purchases in India.
Nearly two-thirds (as many as 62 per cent) of non-resident Indians (NRIs), are not ready to commit to investing in the property market any time soon. The reasons may be varied, but 84 per cent maintain that there is no incentive to embrace the Indian property, as a key investment instrument. Nearly half of the respondents (48 per cent) feel that property prices are too high in India. 34 per cent said they would wait for the market to become more transparent, while 18 per cent have other reasons, including lucrative opportunities in other global markets.
These are the findings of a global online and offline survey by Track2Realty and its global alliance partners. NRIs from the US, UK, Middle East, South Africa, Canada, Australia, New Zealand, Malaysia, Singapore and Mauritius, participated in the survey. They were given a mix of open-ended and close-ended questions, to assess their investment choice in the Indian property market.
Lack of transparency and grievance redressal mechanisms deter NRI investors
“I am skeptical about many of the claims made in the media reports. I have my friends and family back home and the feedback I am getting from them, is that the market is yet to clean up. There are more unscrupulous deals in the property market than clean and transparent deals. Over and above that, property prices are inflated and it is better to be safe than sorry,” says Vasim Afdab, who is working in Saudi Arabia. A majority of the respondents (58 per cent) believe that it would take 36 more months, for the Indian property market to become transparent and lucrative for investment. 26 per cent feel that it may even take another five years, while only 16 per cent of the NRIs feel the Indian property market will be in a better shape in the next one year.
It is not just the policies but its implementation that deters nearly seven out of ten (68 per cent) of NRIs. They maintain that the grievance redressal mechanism in India is still poor and it would take years to get justice. “Even though the intention of the government may be right, to reform the property market and streamline the processes, the overall system in India is just chaotic. Once you land up in a wrong deal, it would end up taking a heavy toll, in bureaucratic and legal corridors. Indian real estate will never attract the kind of investment it should, because the Indians who are exposed to transparency in other countries would not trust the market back home,” says Indrani Guha in the US.
No guarantee of delivery, even with listed developers, say buyers
Do these expat Indians think that public listed real estate companies have a better track record of delivery and promises kept? Surprisingly, 56 per cent of these NRIs maintain that being a listed company, is no guarantee that the company will meet consumers’ expectations. In fact, some of the non-listed developers were rated higher than the listed, large-sized developers. “I bought an apartment last time in Bengaluru with a non-listed but reputed developer and my experience has been good. This time, I had to cancel my plans with a listed developer in the same market, because the company failed to honour its commitment. It is more about the developer’s intent, than being a listed player,” points out Dev Prakash from Dubai.
- 62 per cent NRIs are not ready to invest in Indian property.
- 84 per cent NRIs do not find Indian property to be a lucrative investment.
- Nearly half of the NRIs find property prices too high in India.
- 58 per cent NRIs wish to wait for three years before committing to an investment, while 26 percent would wait for five years and 16 per cent for one year.
- 68 per cent expat Indians are apprehensive about policies and feel that grievance redressal is poor.
- 56 per cent NRIs feel that a listed developer is not necessarily more transparent.
(The writer is CEO, Track2Realty)