Real estate, not term deposits, attracts NRI investment

ROHINI, India - Sept. 14, 2013 - PRLog -- Remittances from the Kingdom to India have gone up by 20 percent in recent months following the weakening of the rupee, and to a lesser extent, the hike in interest rates offered by Indian banks on NRI term deposits.

However, not many nonresident Indians (NRIs) are interested in investing their money in term deposits mainly for two reasons: The majority of the NRIs are Muslims who have reservations about earning interest and the ever-increasing fascination for investment in real estate, particularly those hailing from south India.

Indian banks have been trying to woo NRIs offering 10 percent interest on term deposits against the five percent earlier, but there are hardly any takers. For NRIs from Kerala, investing in Kerala continues to be the most attractive proposition. Despite the commercial city of Kochi reaching saturation point — and its real estate price touching new highs — new projects nearby are offering better choices at lower prices. Bangalore also remains an attractive option for real estate while the realty scenario in Hyderabad is grim because of the state bifurcation issue and a question mark over the status of the city.

Despite the Indian rupee recovering in the past week, there has been a significant increase in remittances to India by the expatriate community, largely by white-collar workers, according to an expert and senior figure in the remittance business in the Kingdom. http://www.sarvodya.com/project_view/center-point/gurgaon...

Albin Joseph, country manager of Express Money, told Arab News that there was an increase of 20 percent in remittances to India in recent months and he believes that it will continue for another two months despite the rupee strengthening. http://www.centerpointbaani.in

He advised NRIs that this was the right time to clear financial liabilities back home, especially housing loans taken by a large number of expatriates in the Kingdom.

This year, the Indian rupee depreciated by almost 26 percent against the Saudi Riyal — from 14.59 rupees on Jan. 1 to 16.94 on Sept. 1 due to domestic macroeconomic concerns.

In the past, India has relied on State Bank of India to raise funds from NRIs through the Resurgent India Bonds in 1998 and India Millennium Deposits in 2001 but this time there is no such move.