How is Depreciating Rupee Affecting Real estate Industry ?

In the past few months, India has seen a major depreciation in the value of Rupee against Dollar. It is affecting the economy as well as the real estate Industry. The Rupee has depreciated 25-30% in the last few weeks. This depreciation has major affects on various industries, Real Estate being one.

Affects of Rupee-Dollar fight on Real Estate Industry :-

India imports a part of the raw materials , cement as well as the heavy machinery used in the construction process. Now with the increase in the value of dollar, these imports have become costlier and the overall construction cost has increased.The extra cost incurred in the import of these raw materials and machinery will be passed on to the end users or the customers in the form of escalation costs. This depreciation of rupee will make under construction property rates to move northwards.  The customers will have to shell out that extra bit of money from their pocket. 

The major contribution to that extra cost comes from the increase in oil prices. As India imports the major amount of fuel, the transportation cost also increases. This is applicable to all the sectors in India and so is applicable to the real estate sector also.

The depreciating rupee has forced the banks to increase the lending rates. Recently ICICI and HDFC bank have increased their lending rates which has affected the customers pockets.

The depreciating rupee is having a positive impact on the NRI's who are planning to own or invest into Indian Real estate. With the decrease in the rupee value, the NRI investors are attracted towards Indian Real estate industry as they have to shell out less money at the current rate of rupee than before. NRI's see this as a golden opportunity as for them the property prices in INDIA has decreased by 15-20%. The same property which costed them Rs 100 few weeks earlier is now costing them Rs.80 in terms of their currency.

So with lower rupee rates, Real Estate Industry can expect good sales from the NRI's especially during Deepawali time which is considered to be golden period in real estate industry.

One of the other communities who have gained from this rupee-dollar fight are the Indian exporters. They are booking more profits on the same articles than before. They can be the one who are better prospects to invest in Real Estate market.

So we can clearly make out that the this depreciating rupee has a negative impact on the local buyers but its a great opportunity for NRI's to invest in Indian Real Estate. Calculated predictions shows that the builders,channel partners and consultants will see an upward movement in the inquiries for real estate from overseas if the rupee does not stabilize in the next 2-3 months time.

Thanks 

Nirad K Singh