Non-Resident Indians (NRIs) have started taking keen interest in the Indian real estate sector following significant appreciation of the dollar v’s the rupee, a top official of housing finance company said today.

“NRIs have started taking keen interest due to the appreciation of the dollar. They have started converting the dollar into rupee”, Director and CEO of LIC Housing Finance Ltd, Vijay Kumar Sharma said.

In 2011 the Indian real estate  sector  had to grapple with a loss of reputation with its alleged link to the 2G scam, but also dwindling sales and funding constraints.

Huge Drop in Sales
A huge drop in sales due to mounting interest rates which hurt both, cash flows and customer demand, and launches came to a grinding halt. Mumbai real estate was the worst affected. Other markets like Bangalore real estate and NCR continued to see sporadic sales. But even here, the trend was definitely downward.

Priyanka Ghosh of CNBC-TV18 wraps up 2011.

Real estate in India got some more bad news as the Reserve Bank of India has raised rates again. The cost of home loans will increase for Indian home buyers and heap more pressure on the those selling property in India.

Indian real estate could become more affordable very soon.

Prices could fall by 10 to 15% by Diwali
New residential home prices could decline by between 10 to 15% by Diwali the Economic Times reports. Indian real estate companies that have accumulated huge inventories as sales dipped over the last two years, are under pressure from banks and investors to sell in order to generate revenues. Adding to the pressure is a growing mountain of debt, over Rs 38,000 crore for the top 11 builders.

Indian property market cannot sustain the current price levels
“The property market cannot sustain the current price levels. Mumbai and Delhi are the most investor-driven markets. This is where the first crack can come from,” says VK Sharma, chief executive officer of LIC Housing Finance, the state-owned insurer which commands a large chunk of the country’s home finance market. A 10% price correction is likely in Mumbai and Delhi around the festival season, as that is the only way to revive sales, Sharma says.

Is now the time for NRIs to invest and buy property in India?
Navyroof.com summarises, Ashish Gupta’s views as she explains why it might just be however we feel it’s not as simple as that.

Should NRI's invest in Indian Property?

NRI’s Repatriate money to India
One option is to repatriate the money to India and invest in Indian real estate. Property investment options here are many. NRI’s can either go in for an under-construction property or for a built-up property.

Upcoming areas v’s developed areas
In case of a under-construction property, NRI’s can go for an upcoming area, where there is higher potential for capital appreciation. In case of a built-up Indian property, NRI’s can look at developed areas, as NRI’s can start getting immediate rental income.

Navyroof.com Indian real estate

Price corrections in India
Price corrections are taking place in a host of Indian cities. while others are still growing, so we would advise investors to judge each location on its merits rather than putting a blanket buy on all Indian real estate.

Investors selling Indian property while others buy
Home sales for example in Noida are down 10% while Ahmedabad real estate is beating falling prices. In some cities there has been a rise in investors selling Indian real estate. Some think its time to bank profits such as those selling Mumbai real estate where a 15% fall is predicted while inJaipur real estate is tipped for growth.

With Indian home loan rates shooting up after RBI hiked interest rates to nearly 11%, stocks of apartments and new units are growing and developers are facing the squeeze on large loans. All this means a price correction is imminent in India.

Something has to give
Some developers have seen a 10-15% drop in sales in the past few months which only compounds the problem even more and something has to give. Rising interest rates and soaring prices are forcing more and people to put off purchasing plans, affecting builders who desperately need money to pay off costly loans and start new projects. The unsold stock in major cities has been going up, forcing banks and equity investors to call for a price cut.

A price correction is imminent
“A price correction is imminent. How long can developers hold back… I think prices will correct by a maximum 15%,” says B Niyogi, chief general manager, real estate and housing, State Bank of India , India’s largest lender. Real estate research firm Liases Foras says approximately 471.9 million sq ft of residential stock, one-fifth the size of Chandigarh, is lying un-sold in the country’s top six markets.

Developers have to cut prices
“Cost pressures are building up for developers. They will have to cut prices to retain volumes, failing which it will impact profitability and cash flow in the coming quarters and affect margins as well,” says Aashiesh Agarwaal, real estate analyst at Mumbai-based Edelweiss Se-curities.

Party may be coming to an end now
“It is becoming almost unmanageable,” says Snehal Mantri, director-marketing at Bangalore-based Mantri Developers. Companies coped with the scenario by increasing prices and hoping that consumers would be able to pay. For some time they did, but the party may be coming to an end now.

15% correction expected
“All private equity funds are working on the basis that there would be a 15% correction. No one wants to lose money,” says V Hari Krishna, director-investments, Kotak Realty Fund , a sector-specific private equity firm.

Drop in Home Sales
According to PropEquity, a real estate consultancy firm, in the last one year, prices of new and existing housing projects in some parts of the country have risen 10-40%. In the first quarter of 2011, Mumbai has seen a 17% drop in home sales, Bangalore 14% and Hyderabad 15%.

Selling low ticket Indian property is ok
An executive at a large home loan lender gives the example of smaller cities where local developers understand the market demand and know how much people are willing to pay. So they price their projects according to the paying capacity. Markets like Lucknow, Indore, Ghaziabad, Faridabad and others are doing well because the ticket sizes are low. “The actual ticket size of a property is what matters. Rs 20-40 lakh is really the segment that will attract mid-income Indians,” adds Karnad of HDFC. All this is happening at a time luxury projects are languishing. “Developers have not been able to interpret the activity in the mar-ket,” points out Shveta Jain at Cushman & Wakefield .

Navyroof.com suggest buyers look for the following documents when buying a property or land in India.

List of documents when buying a property in India
1. Title Document
2. Khata Certificate
3. If it is a resale property (take tax paid recepits for 3 years)
4. Approved plan
5. Occupancy certificate
6. Sale deed
7. Previous agreement copy

List of documents when buying land in India
When purchasing land the documents which needs to be verified are
1. The title deed
2. Encumbrance certificate
3. The release certificate
4. The surveyor’s report

Mumbai’s residential property market is predicted to witness a glut in 2012-13 owing to steady new launches at a time when sales are extremely slow, according to Indian real estate consultancy Jones Lang LaSalle India.

“The overall sentiments of the market and the consistent rate of new project launches in Mumbai give a clear indication of an impending oversupply by 2012. A lot of developers in the most severely affected locations are currently open to closing sales at lower rates,” said a note by Jones Lang LaSalle India.

Mumbai real estate prices have already dipped
According to JLL, Mumbai real estate prices have already dipped in Parel, Lower Parel, Mahalaxmi, Bandra east, Andheri east, Goregaon east, Kurla and Mulund. Jones Lang LaSalle points out that after surpassing the peak values of 2008 by 20 per cent by way of correction, the property rates have now slumped back to peak 2008 levels.

It is likely that property prices in Delhi, Mumbai will drop in the next few months, according to analysts and real estate consultants. In fact, analysts say that there are indications in the market already: price drop in Mumbai and moderation in residential rates in the Gurgaon region.

“As of now, prices have dropped in areas such as Parel, Lower Parel, Mahalaxmi, Bandra East, Andheri East, Goregaon East and Mulund and Kurla. This correction phase will continue for the next three months and inevitably extend into the traditionally slower monsoon/ vacation period,” says Sanjay Dutt, Chief Executive Officer (Business) at property consultant firm Jones Lang LaSalle India.

Another indication of a likely price drop comes from the findings of a Mumbai-based consultancy firm Religare Capital Markets Ltd. The report says the inventory, or unsold residential units, has shown an uptrend in the past few months.