The plunging Rupee, some so-called experts are opining, will open the floodgates of NRI investments into India, especially in the Real Estate sector. “A 35 % opportunity is something that no right thinking investor can ignore” they are claiming, “and this is like Manna from the Heavens for the NRI investors.”
However, the ground reality (no pun intended) is far from what these Realty pushers are trying to sell. Investment Advisers from Singapore, Dubai, London and New York, some of them specialists in handling NRI investments, are not only skeptical, but even advising their clients to exercise caution before jumping on to the bandwagon. “Yes, the falling Rupee is according attractive opportunities to the NRI’s and most have already moved their parkable funds to Indian banks, but whether this money will flow into the Real Estate sector will depend on a variety of factors, some of which are not really conducive” said one.
To understand the imbroglio one has to keep in mind the fact that there are primarily two types of NRI investors: those who are looking at purely investment opportunities and those looking at dwellings where they can move into at a later date. For the first set, the biggest dampener is the hassles of repatriation – taking money out of India, is far from what one may term as smooth – which makes any potential investor, NRI’s included, jittery to begin with.
For the other set, the gap between the promise and the actual product that is delivered is the biggest obstacle, followed by inordinate delays in the actual handing over of the finished property. “Indian realty companies are notorious in delaying the physical possession of properties purchased and NRI’s used to dealing with overseas entities find such actions not only deplorable but also terribly despicable” pointed out one consultant.
The fact that the Indian realty segment is still largely unorganized is another big entry barrier. Except for a handful of entities that are limited and listed, most are first generation entrepreneur led ventures which are notorious for cutting corners. Desperate for the fast buck, these entities live only for the moment and have, collectively done everything possible to “earn” a reputation of being seedy for the entire domain. “The big guys of your business too are no good” said one investment consultant who has had a wide exposure to the segment. “They have all failed to provide returns on the monies invested in their scripts and are responsible for a huge dent on investor finances and confidence thanks to the massive erosion in their market capitalization. When investors ask me overseas as to how entities which cannot even defend their market caps are going to ensure return on the investments made in the properties promoted by them, I am routinely stumped and no amount of arguments backed by figures stating how much an investment in any property developed by them have appreciated in value over time can convince the skeptics.”
Most real estate companies again, follow terribly flawed branding and communication strategies as a result of which, their visibility, especially in the digital and social media is negligible. “You cannot attract the eyeballs of overseas buyers by local Billboards and adverts in the mainline dailies” was the unanimous opinion of the consultants. “If you want to engage NRI buyers and stoke their interest so that they part with their hard earned money, you have to talk their language and be in the platform of their choice. You must remember the way the world (NRI’s included) access news and search for information has seen a paradigm shift – the action has shifted to the hand held devices and if you are not there, chances are, you will not be counted.”
And finally, black, white, accounted, unaccounted, hard, soft … terms that the domain loves to hate, in the final analysis, turns of real investors. It may be the rule of the land here, but to NRI’s used to dealings on more transparent and above board platforms find such practices threatening, if not downright unacceptable.
Is the Indian Realty sector in for massive infusion of NRI funds then? The answer is a big no. The money is there, the opportunity more so. But, to ensure that this money is converted into real time investments, the industry will not only have to be pro active but also embrace game changers that are able to address the contentious issues that plague the sector currently. Till such time a holistic approach is adopted, NRI investments in the sector will remain what it largely is, a pipe dream.
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