Property Sales Slump in Kerala as NRIs Lose Religion
BANGALORE: Residential property sales in Kerala have dropped up to 40% in the last 3 quarters as non-resident Indians, who account for 70% of the demand, slashed investments as a result of project delays, high costs still as higher returns on bank deposits.
Top builders like Sahara cluster, DLF, Unitech, SRK Group, Apple daily Properties and Abad Builders have either delayed, downsized or shelved their comes as a result of dwindling interest among NRIs, who are driving up property costs in God's own country regarding 20% each year.
"Property brokers' business from NRI shoppers has nearly halved," TKC Jose, president of assets Agents Association of Kerala, said. "The market has been stagnant and that we haven't seen a lot of activity from NRIs within the past six month," he said.
Typically, July-August and October-December are thought of peak seasons for NRI property purchases in India. July-August is summer vacation within the Gulf region --where most of the NRI remittances to Kerala come back from. however brokers and developers say there has been tepid response to date this year despite increasing remittances as a result of the depreciating rupee.
"Normally, property sales obtain once the rupee falls, however that trend isn't seen," says SN Raghuchandran Nair, managing director of Kerala-based assets firm SI Property. As per a World Bank report, $64 billion of remittances poured into India in 2011 as a result of weakening rupee and strong economic action within the Gulf Co-operation Council (GCC) countries. It’s estimated that cash sent by emigrants living within the GCC countries like Oman, the UAE and Saudi Arabia to Kerala is reminiscent of the state's budget.
LONG DELAYS
Most NRI investors blame long delays in project delivery for his or her call to not invest in property. S Jose, a senior official operating with a multinational food processing company in Dubai for 10 years, invested in property in Kochi in 2005 and was promised possession in 2 years. he's still waiting. "My cash has been misused... currently i might solely invest if the property is usually recommended by somebody known to me," he says. Trade insiders estimate that around 70% of residential properties in a very worth bracket of Rs 2,700 to Rs 4,000 per sq ft, underneath construction across Kerala, are delayed by over 2 years currently. There are some 10,000 such properties. "NRIs are terribly cautious and are solely shopping for property in comes that are completed or nearing completion. they are doing not wish to risk their cash," says PA Varghese , senior VP selling of Skyline Builders, a Kochi-based assets company.
PLAYING SAFE
Another issue worrying several NRI investors is high property costs within the state. Increasing NRI investment within the residential section over the past few years in cities like Kochi, Thiruvananthapuram and Kozhikode has led to over 20% increase within the capital worth annually. Investments have caught up since October last. Property costs across India have crossed the height level of 2007; however residential property sales are down anywhere between 10-50% in the country, mainly as a result of high property costs and rising value of borrowing. In Kerala, apartment sales have fallen 20-40%, diminishing the industry's attraction as a secure investment haven.
"I had earlier determined to speculate an extra Rs 80 lakh to buy property in Kerala, however currently I like better to place the cash within the bank," says Zubin J, a Keralite primarily based in Dubai. He had bought an apartment price Rs 70 lakh in 2005 and continues to be watching for its possession. in a very high interest rate regime, several banks provide assured come back of 9.5% on mounted deposits, creating several NRIs park their cash in banks than invest in property. George Sebastian, promoter of Kochi-based property brokerage firm international Properties, says some NRIs are investing in land, coconut grooves and farmhouses instead of flats.
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