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Photo: Aniruddha Chowdhury/Mint
Photo: Aniruddha Chowdhury/Mint

NRI returnees lead to a spike in property sales in Kerala

For many of the NRI returnees, buying a flat became one of the first investments they made because of their plans to settle long-term and for upgraded addresses, said industry experts

The return of nearly 2.5 lakh Keralites to the state since May, in the biggest reverse migration in recent times, has proved to be an unusual benefactor to the real estate sector, which has seen a spike in sales of high-end homes despite the covid-19 crisis.

For many of the non-resident Indian (NRI) returnees, buying a flat became one of the first investments they made because of their plans to settle long-term and for upgraded addresses, said industry experts.

The list includes not only Malayalee working professionals but also non-Keralite, migrant returnees belonging to other southern states from the Gulf, who are impressed by the model response the Kerala government in trying to stall the coronavirus spread.

“…The enquiries have increased by almost three times compared to January. Part of this is panic buying. It is a psychological thing. When there is distress in the Gulf, NRIs from Kerala try to withdraw their savings and invest in something closer home. There are even celebrities who have invested," said Sunil Kumar, owner of Asset Homes Pvt Ltd, a prominent developer.

Kumar said with many NRIs who have sent back their families, it is their first readjustment to mitigate financial distress besides the need to get a better address.

"Both migration and reverse migration are factors that have boosted real estate in Kerala. We have seen this before, during the Kuwait War, Iraq war and the 2008 financial crisis," he added.

Kochi, Kerala’s commercial capital and known for its premium villas and apartments, has primarily been an investor’s market. The recent spate of sales has however been driven by end-users, with about 25% being for investment purposes, said property analysts.

When financial shocks due to the coronavirus outbreak hit the West Asian economy, lakhs of Keralites and their families settled there had only one choice: return. This reverse migration-led rebound in home sales in Kerala comes at a time when the real estate sector has suffered a huge blow elsewhere in India owing to covid-19.

Around 10% of Kerala’s 33 million population live and work in the Gulf region, accounting for every fourth Indian migrant in the Gulf region. Their remittances, which crossed 1 trillion in 2019, make up 36% of Kerala’s gross state domestic product and is equivalent to 60% of the state’s debt, according to official estimates.

Murali Krishna, who was born in undivided Andhra Pradesh and is a Global Operations Manager at Finland-based Kone Air, has been living in Dubai for the last 17 years. Covid-19, like for many others, made him reevaluate his choices and invest more than 1 crore in a flat in Kochi.

“Most of my friends and well-wishers are in Kerala because I work in the Gulf. Moreover, every year I travel to Kerala, especially to visit Guruvayur (temple) and other places. Another important thing is that during this covid situation, I’ve seen that a lot of good preventive measures the government is taking in Kerala. That also moved me towards investing in Kerala," said Krishna.

Tata Realty and Infrastructure Ltd’s project Tritvam in Kochi’s Marine Drive area, where homes cost 2 crore and above, has been one of its top five best-selling properties in recent months.

Sanjay Dutt, MD and CEO, Tata Realty said though overall residential sales are down, Tritvam has sold well largely due to NRIs and NRI returnees and because of its location and quality.

As international repatriation and chartered flights started due to the pandemic, according to the Kerala government, nearly five lakh people registered so far, to return. But the flow ebbed with the slow rebounding of the Gulf economy in July.

“Projects below 75 lakh and 2 crore and above are doing well. Many NRI returnees and high-networth individuals are looking at villas and luxury homes," said Srinivas Anikipatti, senior director, Tamil Nadu and Kerala at Knight Frank India, a property advisory.

"In recent months, more than 50% of sales have gone to NRI returnees. Many NRIs in the Gulf have lost their jobs or face salary cuts, so they have no option but to come back. While returning, whatever money they have, they are going to use it to buy something and survive," said S.N. Raghuchandran Nair, a governing council member of real estate industry body Credai Kerala.

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