(MENAFN-Khaleej Times) IPG eyes up to Rs1
The Indian real estate sector begins 2014 on a “very positive” note as demand from non-resident Indians, or NRIs, and local investors is picking up due to its promising outlook in years ahead, says a top official of Indian Properties Group, or IPG.
Prasanna Thakkar, founder and managing director of IPG, said it is the right time for NRIs to invest in residential and commercial properties to ensure good returns on their investment in Indian real estate.
He said India’s realty sector witnessed significant growth last year despite several predictions circulating on the shift of the market’s direction due to the upcoming general elections and changing political equations.
“Now is the right time to invest in real property. The real estate picture for India in the year 2014 has been of a gradual growth, maintaining a healthy competition in the market. There are immense of opportunities, whatever the situation is,” Thakkar told Khaleej Times on the sidelines of India Properties Spring Expo, which concluded last week.
He said the current year is going to be better than the previous one, not only for NRIs but also for local investors as demand is picking up and sales of stagnant projects in the last quarter of the 2013 have started to attract interest from various investor segments, witnessing positive vibes in the market.
Thakkar said potential buyers have been given exceptionally-good deals that encouraged them to invest in several projects across the country. “The key for growth is to make sure that we stay closer to investors, anticipating their requirements and providing them with good value for their investment.”
“All in all, the rupee, the lucrative offers by developers, the overall growth of infrastructure back in India, as well as the positive trends happening in the Middle East economies are all contributing to the overall growth in the real estate sector,” he said.
Thakkar said the year 2014 will create wonders for Dubai’s realty sector, thanks to UAE’s winning bid to host World Expo 2020.
“The status of Dubai as a global metropolis has seen major advancements towards the economic growth. It seems an overall increase in disposable incomes, although there has been an escalation of costs too,” he said.
About IPG’s performance last year, he said the group achieved significant sales growth, which is valued at Rs1 billion.
“This growth is mainly by selling the projects of the developers we represent, despite the overall scenario has been uncertain to some extent in view of the upcoming general elections and a couple of other factors.”
Regarding IPG’s growth prospects in the new year, he said 2014 has begun on a very good note, registering substantial sales of Rs150 million logged in for the month of January itself.
“We plan to cross Rs1.5 billion to Rs1.75 billion in total sales for the developers we represent this year,” Thakkar said.
Elaborating, he said NRIs’ remittances have been increasing consistently and the same trend will continue throughout the current year.
“The sharp depreciation in the Indian rupee last year paved the way for a much-transparent real estate sector in the sub-continent. There has been a considerable increase of around 15 to 30 per cent for buying property in India by NRIs, especially from the Middle-East region, following the rupee’s depreciation. There are also new market entrants, who are taking advantage of the rupee’s depreciation.”
NRIs hold the key
Thakkar said many developers are aggressively campaigning for their projects extending interesting offers and potential opportunities for the NRI segment. The market is currently witnessing signs of revival driven by both economic policy and new investments.
“There are other major factors including cheaper home loans and the approval of the Real Estate Bill by the Indian government last year, which contributed significantly to improve NRIs’ investment in Indian realty sector,” he said.
About NRIs’ investment in real estate projects — both in the commercial and residential segments — he said the Indian diaspora living across the globe pumps around $80 billion to their motherland every year.
The NRIs in the Middle East region stand on top as they remit almost 70 to 80 per cent of the total, and a sizeable portion of this is moving to the real estate sector apart from fixed deposits, FCNR and bullion, among many others.
“All the major developers have now understood the importance of NRI investment in India’s realty sector, and the NRIs contribute from 20 to 50 per cent of the total sales of the developers across India, and this figure is increasing.”
With over 25 million people of Indian origin living overseas, the sub-continent is already the world’s largest recipient of foreign remittance. In 2012, India registered a total global remittance of $70 billion, according to World Bank statistics.
Referring to money remittance industry experts, such as Ismail Ahmed, chief executive of WorldRemit, he said the remittances figure could rise to $80 billion in the current year given the jump in transfers. “As several industry studies indicated, every developer in India is garnering 20 to 50 per cent of their sales from the NRI investments. This is estimated at $15 billion of NRI investment in real estate sector altogether.”
NRIs prefer Mumbai
To a question about the most popular cities for NRIs investments, Thakkar said the “City of dreams”, Mumbai, is the all-time favourite amongs NRIs based in the UAE.
“Projects in other Tier-1 cities like Bangalore, Gurgoan, Noida and Chennai are also having higher demand from the overseas Indians for investment. Among the Tier-2 cities, the most-preferred locations for NRI investments are Pune, Nasik, Mangalore, Goa and Zirakpur near Chandigarh,” he explained.
About the financing options for NRIs, he said most of Indian banks have their representative offices in the UAE to support their customers in the Middle East generally.
“These representing operations of the banks do the approvals and other official procedures here itself, so the NRIs enjoy a hassle-free loan approval for their investments back home,” he said, adding that the ratio of the loan pay-back by NRIs is 100 per cent and they can disperse 80 per cent of residential projects and 50 per cent of commercial properties through bank financing for a period of five to 20 years.
To a question, he said NRIs have to pay some taxes on their investment in the real estate sector.
“There is a service tax, value-added tax apart from stamp duty, TDS and registration charges. With regards to the resale of properties, there is a capital gains tax, which is 20 per cent if the property is sold after three years of buying,” Thakkar concluded.
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