NRI investors tap potential in Bangalore

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Many NRIs who have been sitting on the fence for some time are now evincing keen interest and want to enter the market given the host of options across many price points available now. Surveys conducted at property shows held in West Asia and the US revealed that demand from NRIs for property investments in Bangalore is now on the upswing. 

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With favourable exchange rates, availability of property management services, competitive lending rates and easing of payment options, the timing is appropriate for NRIs to invest in residential property in Bangalore.

There are two categories of NRI investors. While end-users look at multiple options, bargain deals and flexible norms, investors are early birds in any project. A typical investor invariably looks at select developers while project launches are carried out. With better lending rates and facilities available abroad, and substantial down payment options, they are better-placed while negotiating with property developers in the city.

According to leading developers, in today’s market situation, NRI investors can get 20-40 percent returns on investments depending on the attributes of the project and payback period. For developers, NRIs have become an alternate source of raising funds in a market where private equity developers are taking a longer time to commit to deals. Moreover, with bank funding options depleting, funds which have already invested in residential projects are cautious in deploying funds to new projects. This is yet another reason why NRIs can get a good bargain and reap higher appreciation.

Due to the inherent risks associated with investing in land, NRIs are more comfortable dealing with pre-launch apartment sales and with those who ensure minimum guaranteed returns on their investments. Projects of reputed developers are considered risk-free from a liquidity point of view, according to property consultants abroad.

Most leading developers have their own set of NRI investors who will go along with them while launching new projects in Bangalore. There are others who guarantee minimum returns irrespective of the location of the project. Again, services extended like leasing and resale support encourage NRI investors to stick to select developers and commit additional investments in their projects.

In Bangalore, 43 residential projects were launched in the first quarter offering 11,167 units as against 7,791 units in the fourth quarter of last year. Meanwhile, 13 residential projects comprising 5,126 units in various sub-markets were withdrawn from active stock as they were completely sold out, according to N S Srinivasa Reddy, Assistant Vice President – Research and REIS, Jones Lang LaSalle Property Consultants Pvt Ltd.

The Whitefield sub-market was home to 34 percent of all new launches in the first quarter. The sub-market with the next highest percentage of new launches in the first quarter was Bellary Road which contributed 32 percent of new launches.

Capital values appreciated across various sub-markets in the first quarter due to an increase in sales volumes and higher prices in most projects that were nearing completion. In fact, residential property sales also went up in the first quarter due to shortage of built apartments. Rentals are likely to increase further in the first half of this year due to the expected improvement in the employment scenario in the city.

According to property consultants, the growth corridors of north Bangalore should be considered for investments. With the Metro connectivity improving, the western region should be focused on for long term investments. It is said that improved connectivity will push property prices in the coming months.

Overall, the residential property market is likely to exhibit continued steady growth in the first half of this year.

Source: Times Property