UAE expats helping to revitalise Indian property

Indian domestic property has been in the doldrums, but developers have been tapping into the non-resident market to revive sales.
A construction worker stands on the construction site of a housing block in Sector 105 of Noida, in Uttar Pradesh, India. Sanjit Das / Bloomberg
A construction worker stands on the construction site of a housing block in Sector 105 of Noida, in Uttar Pradesh, India. Sanjit Das / Bloomberg

Country Club, an Indian holiday and leisure company, this month entered the Indian residential property market, launching an upmarket development in Bangalore, with the aim of targeting sales at Indian expats.

The company, which has a hotel in Bur Dubai, spotted a lucrative opportunity to tap buoyant demand for property from expats in the Emirates, a market many Indian developers have increasingly focused on amid sluggish domestic demand.

“It’s nothing but your attachment,” says Y Rajeev Reddy, the chairman and managing director of Country Club India, explaining that Indian expats in the UAE preferred to buy in their home country, partly because they are unable to get citizenship and many would be likely to eventually return to India.

For developers, who are building homes in a country where economic growth has slowed and interest rates and inflation are high, the expat Indian community is crucial.

“They see it as a hedge to domestic investment,” says Mudassir Zaidi, the national director, residential, at Knight Frank India. “Definitely when markets are not very hunky-dory, the NRI [non-resident Indian] segment has kept the market active, so I would definitely say that most developers are looking at NRIs as a major source of investment.”

He explains that developers turned to Indian expats following a slowdown in sales domestically over the past year amid an uncertain political and economic environment.

“Overall there was a big slowdown in terms of investment in Indian real estate, largely from the domestic sector,” he says. “Most developers were largely getting money only from the domestic sector.”

The rupee’s plunge to record lows last summer prompted many expats to look towards the Indian property market to take advantage of the currency weakness, which meant that their dirhams or dollars could buy more rupees.

“In the last calendar year we saw a lot of investments coming in from NRIs,” says Mr Zaidi. “One because they saw the rupee depreciation, so their buys had become about 20 per cent cheaper, and plus because the general slowdown was there in the market, developers were willing to offer further discounts to get these deals done, so a lot of NRIs got properties cheaper by about 25 to 30 per cent than what they would have got earlier. So there was a lot of investment from a lot of large NRI markets, especially the UAE.

“Then developers realised that overall there is a lot of interest from NRIs, and because domestic sales were anyway slowing down, they wanted to then tap NRI markets in about five or six locations across the world. The Middle East was one, especially the UAE. Apart from that it was the UK, Singapore, Hong Kong, to some extent the US and Canada, and Australia.”

Restrictions in India’s property market largely prevent foreigners from buying in the country.

Manju Yagnik, the vice chairperson at Nahar Group, a developer based in Mumbai, says the group is actively targeting Indian expats, and is building two towers for NRIs at in Chandivali, Mumbai.

“Currently the demand for residential properties from NRIs is considerable,” Ms Yagnik says. “The reason for this scenario is in the past two to three decades large numbers of Indians have migrated to UAE and other Gulf countries. The boom in the real estate market in India and its positive outlook in the near future has encouraged many Indian migrants in Gulf countries to invest in the real estate market in India.”

Nahar has launched a wide array of marketing efforts to reach prospective buyers in the UAE, she adds.

“We opted for wide publicity through varied mediums such as online, print, participation in exhibitions in UAE [and elsewhere] to spread the word about our projects among the UAE and Gulf resident. We also have our full fledged office [in Dubai] owned by us and the day to day functioning is carried out by our own representatives.”

Such efforts make sense, given the current environment.

“A large section of the resident Indians who look to invest in real estate have already done so,” says Sandeep Singh, the chief executive of Century 21 India, a division of an American real estate agent franchise company. “New prospects who want to do the same are hesitant and waiting for the industry to bounce back. Thus for the developers and brokers it’s a good proposition at present to market the properties  overseas where the liquidity is very much intact. Investments drawn from overseas also tend to be larger.”

Non-resident Indians often account for 15 to 30 per cent of sales of Indian property projects, according to Sunil Jaiswal, the chief executive of Sumansa Exhibitions, the organiser of the Indian Property Show, which will be held in Dubai next month.

About 10 per cent of home sales at Lavasa, a 500 billion rupee (Dh31.35bn) hill city under development near Pune, are to Indian expats in the Emirates, while 5 per cent are to NRIs based in other countries.

“Certainly today the largest number of customers [outside India] would be from the UAE, I think given the proximity that the UAE market has to India,” says Nathan Andrews, the president of Lavasa, explaining that it plans to boost its efforts to attract NRI buyers. “We are again looking at being more intentional in the market, particularly the UAE.”

Mr Reddy at Country Club is confident that India’s new government will help to boost the property market. The company plans to start building its housing project in Bangalore in the next couple of months, scheduled for completion in 2017. It plans to offer room service and housekeeping options and has launched its homes with prices starting from 3,999 rupees per square foot in an effort to attract buyers.

“Things are going to change,” says Mr Reddy. “The government is changing, the economy is changing. We have to take the first step. There are only two things which Indians believe in – one is gold and another is real estate.”

Workers in Gulf make sizeable contribution

JC Sharma, the vice chairman and managing director of Sobha Developers, an Indian property company headquartered in Bangalore, Karnataka, with major luxury residential projects in other states including Kerala, talks about the importance of the Indian expat market.

What kind of demand are you seeing for your residential properties from Indian expats?

Overall, 29 per cent of our customers are NRIs. Twenty per cent of our customers in Bangalore, Mysore and NCR, 41 per cent of our customers in Chennai, Coimbatore and Pune and 34 per cent of our customers in Thrissur and Kozhikode [in Kerala] belong to this class of investors. Over the years, we have seen an increase in the percentage of people from the Middle East who are investing in our properties. The large presence of population from Kerala in the Middle East contributes meaningfully to our sales in the real estate market here. Currently, about 9 to 10 per cent of our NRI customers belong to UAE. The UAE is also a very important market for us, because of the presence of a high percentage of professionals from Kerala working in the Gulf region.

Where else do you attract buyers from?

Besides the Middle East, we also have customers from Singapore, US, Canada and Europe. The majority of the buyers from the Gulf and UAE buy properties in India for investment purpose or for their family back in India.

Could you talk about the kind of marketing efforts you are making to attract UAE buyers?

We have a full-fledged office in the UAE to understand the market and cater to the needs of the customers. The profile of today’s home buyer includes people from a tech-savvy generation in the age group of 30 to 45 years who prefer the online medium to conventional print platforms. Thus, marketing activities are more effective on these platforms. We plan to launch our e-commerce portal soon which will enable customers to directly transact with us. It will not only help our domestic customers but also benefit our NRI customers.

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Published: May 17, 2014 04:00 AM


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