Kerala’s property market crunch has nothing to do with India’s economic situation, but a worrying trend anyway

Non-resident Indians, who were once major property buyers in India, are now keeping away from investing here, and the Indian state of Kerala seems to be the worst affected.

Off lately, Kerala has seen more than 50% drop in sales to the NRI buyers, as per the global real estate consultant Coldwell Banker. Among other places affected by this NRI disinterest in Indian property market are Ahmedabad, Surat, Vadodara, Bengaluru, Mumbai, Pune, Hyderabad, Gurugram and Noida, which have seen around 20% drop in the annual demand over past two years.

Also read: Know why NRI home buyers are back on property developers’ radar

The slowdown in the Gulf region, which has significantly reduced NRIs' disposable income, can be cited as the reason behind this change in trend, while one can’t ignore the role played by a week rupee, which even though improves the buying capacity, makes the actual ROI lower for NRIs.

Kerala's property market has seen major investments from Gulf countries, which have now slowed down due to job rationalisations and slower economic conditions in Western Asian countries.

This has forced the Kerala-based Builders to make homes for the middle income group so that at least local buyers can be attracted. Earlier, they focused on making houses costing Rs 1 crore and more, to invest NRIs.

Some experts believe that it’s also the poor quality of client servicing and construction that has led to a lowered NRI interest in buying properties in the state.

Image source