Now or a little later? Expatriate Indians here looking to acquire property back home are veering between these two timelines as the rupee's ‘soft' ways continue.
Against the Rs14 a dirham would have fetched at the beginning of the month, by the close on Wednesday it had slipped further to Rs14.59. And in the early hours of yesterday it was pushing past Rs14.62. There is a lot of interest — and expectation — among Indian expatriates about whether the slide would push it beyond Rs15 to the dirham. (So far, there has been no indication by the Indian government about a possible intervention to stem the slide.)
Which brings the question back to whether a potential investor looking at property in India should make a move now or wait a while. For those tracking how investors might behave, the Indian Property Show, which opened yesterday at the Dubai Airport Expo, would be a good place to visit.
Some of the biggest names among Indian developers are represented, as are mortgage specialists and investment advisers. But Kapil Goyal, general manager for international business at Mumbai-based Nirmal Lifestyle, does not want the soft rupee to be seen as a one-trick pony to influence investment decisions.
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"There is still the mammoth scarcity of housing and business space and the need for investment in all sectors for the growth of the Indian economy," Goyal added. "India is an ideal investment destination with best-of-class returns on mid- and long-term investments."
It is a moot point whether potential investors in the Gulf seeking immediate buys will see it that way. For them the sole criterion would be to leverage the currency situation to their advantage.
"There are two parallel strands that could convince buyers to get in now rather than at a later stage — the currency is one, but so is the fact that Indian property values in a majority of investment destinations are stable," said a mortgage adviser at the property exhibition.
"If the Reserve Bank of India were to rejig lending rates from the current highs, that's another fav-ourable strand investors could look into."
So should investors who have made up their minds seek the funding from banks here? Or do they stand to gain if they did so from lenders based in India itself?
"The one major measurable gain from doing so in India is through the hedging of currency fluctuation risks," said Goyal.
"Secondly, the Indian banking system has proven to be quite robust in covering the inherited risks attached with home finance though that benefits lender more.
"In the case of overseas loans, the repayment schedule may get hampered with the ongoing fluctuations in the global currency market."
For today's investors, just honing in on a property is not enough. They better develop a keen understanding of the currency markets, hedging and such esoteric financial transactions. Did anyone say property buying was easy?
Options limited for now
Investors in stocks often go by what the rating agencies have to say. At some point in the future, such a service could even be extended to property buys in India. As of now, a developer wanting to boost credentials could voluntarily seek rankings from agencies such as Crisil, which is a subsidiary of Standard and Poor's, and Naredco.
Investors can also engage independent firms to do due diligence on projects. "At this point, such a move is at a pretty nascent stage," said Pankaj Pal, chief sales officer at Ireo. "It is not practical for an individual to hire such agencies. However, what they can — and must definitely consider — is whether a particular project has been approved for mortgage based loans by reputed banks and financial institutions."
The planned Real Estate Regulation Bill is expected to create a level playing field. "The Real Estate Regulation Bill will add momentum, but in due course," said Kapil Goyal of Nirmal Lifestyle.