Hyderabad is seeing a lot of interest among NRIs, with areas such as Kondapur and Shaikpet enjoying demand from potential buyers Image Credit: Gulf News Archives
he year 2020 is expected to shape the coming decade in many ways. Indian real estate will undergo significant changes that will result in its increased contribution to Indian GDP. The government has a vision of a $5-trillion (Dh18.4-trillion) economy by 2025 and real estate is expected to contribute close to 13 per cent to this.

The year 2020 is expected to shape the coming decade in many ways. Indian real estate will undergo significant changes that will result in its increased contribution to Indian GDP.

The government has a vision of a $5-trillion (Dh18.4-trillion) economy by 2025 and real estate is expected to contribute close to 13 per cent to this.

- Shajai Jacob, CEO, GCC, Anarock Property Consultants

The Union Budget 2020-21 will have a defining impact and the finance ministry is under tremendous pressure to deliver. Across sectors, the hope for government to unleash tax cuts, consumption boosters or increasing credit off-take from banks to ease liquidity is high.

Real estate particularly would be eager to hear more about implementation of the slew of SOPs announced over the past quarter and would hope for alternative investment funds to complete the stalled residential projects.

Unfortunately, recent geopolitical issues within the center East may disrupt the plans of a recovery this year. The rise in oil prices have a chain effect on the economy. Interest rates for home loans might remain unchanged, and inflation is likely to be upwards of the government target of 4 per cent. In short, some of the measures that the government could have provided may not go through.

These gloomy prospects notwithstanding, the real estate sector does contribute over 8 per cent to the Indian economy, and has justifiable expectations from the Union Budget 2020-21:

Raising the tax rebate on housing loan interest rates could provide impetus to healthy demand in affordable and mid-segment housing.

Providing ITC (Input Tax Benefits) in GST on construction materials for under-construction homes to cash-crunched developers might enable them to pass on the price benefits to buyers.

Immediate deployment of Rs250-billion (about Dh13-billion) AIF — maximum utilization of the stress fund without delay is of utmost importance. Completion of stressed projects will improve homebuyer sentiment and boost demand.

 The impact of the ongoing liquidity crunch has been felt across sectors. In land , developers can see a rise in capital flow if availability of liquidity is eased. This cash flow will enable them to keep up supply, which will further keep prices in check.

The government has given the benefits of infrastructure status to the affordable housing segment but developers are unable to secure project funding at lower interest rates. This has resulted in reducing the profit margins for this critical sector. Incentives for alternate sources of investments are the need of the hour.

Accelerate infrastructure development — the government’s emphasis on improving infrastructure is commendable.

However, definite economic benefits from spending Rs100 trillion over the next five years will depend on swift on-ground implementation.

Bottlenecks shackling infrastructure growth need to be addressed. Housing has historically been the preferred investment option for the expatriate Indian diaspora.

It remains a safe alternative to the other available risk-prone investment options. Though the range of property options available for NRIs today are spread across India, the western and southern regions have drawn a significant amount of interest as many NRIs hail from there.

NRI Investment Hotspots for 2020

As per ANAROCK research, the Mumbai Metropolitan Region drew the lion’s share of new housing project launches, with 23,045 new launches in the second quarter of last year, followed by NCR, Bengaluru and Pune.

NRIs have an affinity towards specific micro markets within MMR, Bengaluru, Noida and Pune. Several residential projects (both affordable and luxury) have come up across these key property investment hubs.

Key regions within the Mumbai Metropolitan Region that are drawing NRIs are The Peripheral Central Suburbs, parts of the Western Suburbs, the Central Suburbs (up-market areas like Wadala) and Thane. As per ANAROCK research, these markets have seen growth in capital appreciation as well as sales velocity in the recent past.

Pune has also been on the buying radar of NRI real estate buyers and investors for several years. Micro markets such as Hinjewadi and Balewadi are the most sought-after locations and offer a range of residential property options.

NRIs looking to invest in Indian real estate have shown affinity towards the NCR market in the past. With sales exceeding new launches for the fourth consecutive year, the unsold inventory has been reduced to a five-year low. New Gurgaon and Noida are the key micro markets offering high ROI products.

In Bengaluru, the economic hubs within the southern and eastern parts of the town are among the favourites for NRI investors. Micro markets like Devanahalli, Whitefield and Sarjapur Road offer a bouquet of premium and affordable residential projects.

In Hyderabad, the northern and western parts of the town are hotbeds of NRI investments. Micro markets like Kondapur and Shaikpet account for the main demand.

Interestingly, while the central suburbs of most big cities in India are seeing a lull in demand, the peripheral areas in conjunction with upcoming commercial and retail hubs within the town boundaries are seeing both capital appreciation and sales velocity. Thanks to the Indian government’s determined infrastructure push, these areas have increasingly good connectivity and property prices are but within the central suburbs — apart from the scope for further negotiation.