It's homecoming season for NRIs. But this time around, they are not dashing to their neighborhood realtor to book a flashy second home. 'Caution' has become the catchword. Global real estate consultants and experts feel that the 'only real catalyst' that could pep up the NRI spirit during this lean period is a significant price cut, which is expected to happen in the next 3-4 months.

Only reduced property rates can prompt NRI participation in today's these market conditions, feels global real estate consultant Jones Lang LaSalle Meghraj (JLLM). The Indian real estate market has sparked off a new wave of interest among NRI residential property buyers but they are awaiting a further fall in property rates. Once this happens in the next 3-4 months, we will see increased NRI participation in real terms," JLLM CEO (Business) Sanjay Dutt told ET.

"The promise of a correction in the key metros and tier-II cities has revived NRI interest in the residential market. We expect a number of scheduled transactions to happen by the end of the first quarter of 2009," Mr Dutt said while stating that NRIs will steer clear of investments in retail projects and other property segments in "unfamiliar and historically over-speculative tier-II and tier-III cities".

According to him, NRI preferences are also undergoing a sea change, where they are picking up only existing, fully-leased assets of reputed developers. "These would primarily include projects by developers who were intending to launch IPOs and now need to unlock capital to fund new ventures," Mr Dutt remarked.

Mr Dutt's remarks find echo in the statements of a US-based NRI, Lalit Patel. "There is no doubt that the effects of recession will be felt on the real estate market in India. So I think it is better to wait. At present, the prices are on the higher side," Mr Patel said while replying to an email query.

The seemingly lacklustre approach of NRIs has also influenced the business plans of some developers like Ganesh Housing Corporation. The Ahmedabad-based developer, which is targeting NRIs with its luxurious villas and apartments in a 500-acre project, has delayed the launch of this project and is also thinking of a rejig. Ganesh Housing business development head Bhavin Mehta says, "NRIs have become increasingly cautious while investing in property. People may invest as inflation lowers further next year. But for the time being, the earlier euphoria is missing and people want to see the project before investing."

The sharp appreciation in the dollar is also another factor that could drive NRI investments. "Due to the depreciation of the rupee, NRIs are getting 12% extra benefit in terms of value this year," said Suresh Patel, vice-president of Gujarat Institute of Housing and Estate Developers, an association of developers in Gujarat.

"The growth rate of NRI investments in real estate projects in Ahmedabad had risen from 5-7% in previous years to 10% last year. This year, we are expecting the growth rate to be flat," Mr Patel said, adding that NRIs this year were eyeing residential projects in the price range of Rs 30 lakh to Rs 1 crore in the city.

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