sgverma

Property 33% cheaper for NRIs

Rupee dips to 14.77 against UAE dirham today

By

• Vicky Kapur

Published Thursday, December 15, 2011

A large number of Indian expatriates in the UAE are expected to sift through 300 projects worth $5 billion showcased at the ongoing Indian Property Show in Dubai as an all-time weak rupee affords their dirham the power to buy bigger and better properties in their home countries.

“The scope for Indian real estate market is simply unlimited. It does not resemble a bubble that will burst. An unhindered growth for the next two decades is almost sure because outsourcing business in the country entails a huge demand for commercial buildings and urban housing, besides improvement in infrastructure across the country,” said Sunil Jaiswal, CEO, Sumansa Exhibitions, the organisers of the show.

What he might as well have added is that the dollar-backed UAE dirham, which rose today to an all-time high against the rupee (Dh 1 today fetched Rs14.776) is making it affordable for non-resident Indians to borrow cheap in dirhams and then remit huge down payments for properties of their choice, taking advantage of a favourable exchange rate.

It also means that they will have to shell out lesser dirhams to make their monthly instalments, which are fixed in Indian rupees by Indian banks. “The enquiries and purchases by NRIs have kept on increasing,” says Jaiswal.

With the rupee deteriorating by more than 21 per cent since the beginning of 2011, it is the worst performing major Asian currency this year. With a 21 per cent cushion under their belt, NRIs that borrow locally and remit lump sum may also get a 15 to 20 per cent discount from Indian developers if they make the full payment for the property upfront.

This works out to NRIs getting the same property about one-third cheaper today than what they might have bought last year. This is how it works: Let’s say the property in question is for Rs1 crore. Now, at the prevailing exchange rate on January 1, 2011 (Dh1=Rs12.169), the value of the property was Dh821,760.

At today’s exchange rate (Dh1=Rs14.776), however, the same property’s value becomes Dh676,773 for an NRI sending money from the UAE. Assuming that the developer might offer a 20 per cent discount for full payment, the same property would then be available for Dh541,418 – or 34 per cent lower than the Dh821,760 that an NRI had to pay at the beginning of the year.

While these gains are, of course, hypothetical, the Indian property developers participating at the ongoing property show in Dubai will be hoping that UAE NRIs will turn out to make these gains real.

Designer

Hi,

I think most of the middleeast expatriates have already drained off their savings when the rate was hovering around 13.50 !!!. Actually it was really tempting for expatrites to remit their remaining savings when the exchange rates were about 10% above w.r.t. last years rate. At that time when the exchange rate touches 13.50 nobody were sure about further depreciation of rupees by another 10 percent...

Now only cheap personal loans are the remaining options left with them ..that too for very few bcoz the scenario is same with personal loan like savings in middleeast.

BTW depreciation of rupee is not a matter of joy for development of our nation in long run.

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