Ten reasons a non-resident Indian (NRI) must invest in a property in India in 2019.
1. Fast growing market
India is amongst the fastest growing markets in the world. While the growth rate this year will be a function of the outcome of the 2019 Lok Sabha Elections, there is no doubt, the market will have decent to a good rate of growth, irrespective. As Dalal Street pundits say, it is always a good time to invest in India. Much better than keep in Fixed Deposit in Singapore for a paltry 1.88% growth!
2. Lok Sabha Elections 2019
The 2019 elections will ensure home buyers and builders in India wait for the new government to take shape before they plunge in. Whichever is the government, the likelihood of the property markets rising is high. If Prime Minister Modi led NDA government returns, consumers and builders will sense stability and plunge. If an alternate government comes up, the new cabinet will know that propping up the property market will cheer a lot of people and hence act accordingly.
3. Mortgage borrowing rates
The Central government has had a strong intent over the past four years to ensure more and more Indians can afford to own a house. Home Loan rates have fallen from 12% to around 7.5% over this period of time. The rates are low today and conducive to buy. After years of burdening NPA, Indian Banks and NBFCs are also taking ultra care in evaluating a property, builder or business model, before approving loans. The consumer’s risk options are getting narrower.
4. Commercial property surge
A growing state, high GDP, accountable and transparent policies are likely to spur the commercial market space. Recently in World Bank rankings, India jumped up 23 places to now be ranked 77th in ‘ease of doing business’. More companies are expected to come in and concepts like co-working space, new generation cultures etc are expected to increase. Like it or not, India is the land of opportunities today and even when the job market slacks, the alternate options (startups, traditional businesses, e-businesses) will continue to grow. Families now don’t stay contended with that one product family business but want to get into a multitude of businesses. Students are dropping out from colleges to start own chain of restaurants. Housewives are getting into e-business models. Commercial property investments are expected to be very profitable.
5. Post GST era
After the GST implementation teething issues, the GST process is expected to be stable, robust and more acceptable to its users in 2019. The stabilisation of the GST process will gradually increase the rate of growth in India. Including growth of the property market, which has stagnated a bit off lately.
6. Why Mumbai?
In fact, it’s not a piece of bad news for NRI investors that the Indian property market stagnated over the last two years. The slowdown has affected the Bengalurus, Punes, Hyderabads and the Tier 2 cities more, than the big boys. Mumbai (and Delhi NCR) property rates haven’t slowed much and likely won’t ever. The land of Bollywood, Sachin Tendulkar and countless job opportunities will only get more expensive. The state and central government have worked on alternate transportation modes over the years – the Bandra Worli Sea Link and the Mumbai Metro amongst other things and hence more than residential purpose, luxury apartments are a good option to buy here for ones who are ambitious. I hear along with Bullet Train, there is also a reliable water transportation project in the pilot stage. Mumbai is likely to attract more people, denser business environment and more investment in the coming years. In most surveys, Navi Mumbai features amongst the best places to settle in India. It’s always a good time to invest in Mumbai. As long as you rely on a top grade A level builder – Godrej, L&T, Ozone etc – you are in business.
7. Bangalore & Pune
The property market stagnation in other cities is all the more reason why one should invest in properties now. Residential property rates have now become very affordable and one must jump in before the train leaves the station. Decent 3BHK apartments in Bengaluru are still available under one crore INR. North of the city near the airport or Manyata Tech Park, you get similar properties at even 20% lesser. At that budget, you can find a house in semi prime areas of Pune like Hinjewadi & NIBM too. If these areas and properties aren’t picked up now, in two years time, the prices are likely to shoot up. Do note, Bangalore is heavily working in spreading the Namma Metro lines far and wide. In five years time, traffic should be better and property prices, much higher! So what next? Just go for an A Grade builder!
8. Stability in environment
Aside from infrastructure development, property prices will escalate for a multitude of reasons. The stagnation over the last two years was due to multiple initiatives by the Narendra Modi Government – to curb black money, the demonetization initiative, GST rollout and a plethora of new policies introduced. Builders were/are wrapped in these muddles still but what it had done is, the weak and the manipulative builders have fallen away. The builders who would take ten years to complete a property are either broke or vanishing. What’s getting left behind are better builders, GST stabilisation, only white money dealings, RERA approvals and stability in policies. The transformation era is on. If you seek to buy property in complete white and only from a reputed builder, it is a good time to do so.
9. One tower at a time
Besides, builders aren’t over-committing now and only building what they have been able to sell. Top Grade A Builders these days are completing properties within the promised timelines. This is because, as mentioned above, they only build what has been booked by the customer. If one tower can hold 200 flats and a builder can build three towers (ie 600 flats); they will first open booking for one tower, sell all the 200 flats and then complete building that tower. Only after that (midway parallelly) do they and start launching for the next tower. Gone are the days when a builder would launch three towers together, sell only 300 (out of 600) flats and take five years to build the three towers.
10. Exchange Rate
The SGD to INR exchange rate is near an all-time high of 1 SGD = 53 INR. That makes it a good time for an NRI to invest big in India. And what’s bigger than to bet on the property market. Think of it, five years ago the rate was 1 SGD = 40 INR which meant that a one crore INR property that cost 250,000 SGD then, will cost 188,000 SGD today.
Considering that the property prices in Bengaluru, Pune, Navi Mumbai, Thane etc have not increased substantially over the last five years, it makes today a better time to invest in an Indian property than in 2014!
Do keep a lookout at the various Property Exhibitions coming to Singapore. The next big one is the Indian Property Fair on 16-17 February 2019 at One Farrer Hotel. A lineup of Grade A builders are expected to be there. Builders who spend money to fly down and sell at Singapore are all the more desperate to sell properties here. Important to bring your negotiation caps with you!
– AVIJIT DAS PATNAIK