How has Currency Depreciation Become a Blessing for the Real Estate Industry?

Kavya Manoj K

Depreciation, obviously we will focus on anything that falls. All our attention will be cantered on the fallen object. Unfortunately in India, it is the value of our currency. In 2022 Indian Currency already depreciated by more than 7%. It declined against the US Dollar. 

The depreciation or appreciation of anything is valued through comparison. Indian Currency is compared with the US Dollar. Therefore currency depreciation means the value of the Indian Currency dropped with US Dollar.

Indian Rupee is depreciating against the US Dollar. The major reasons for this depreciation are the factors like Russia-Ukraine war, rising crude oil prices, and other financial conditions. Other currencies like the British pound, Japanese yen, and Euro too faced depreciation along with Indian Rupee. The depreciation is happening for 4 years. 

Currency depreciation resulted in a price hike of goods. Only with the importing and other services from other countries, we can compensate for the economic shortage. Due to the currency depreciation, India has to pay an extra amount for importing. Mainly crude oil and food grains are imported into India. 

Various industries gained benefits because of currency depreciation in India.

One such industry is The Real Estate Industry. With the currency depreciation, many NRIs and foreign investors began to purchase properties.

They are the real benefactors of economic depression. Currency depreciation made properties in India cheaper for foreigners. This depreciation gives the NRIs the best opportunity to own a house in India. As the value of the Indian Rupee declined they can afford properties in India at cheap rates. Many purchased luxury homes and high-end apartments for cheap rates. An increase in purchases increased the business for the real estate sector. 

As the demand for the Indian real estate sector diminished due to currency depreciation, Indian builders began to focus more on foreigners and NRIs. Indians won’t afford any property during currency depreciation. They tried to balance the current economic situation. So builders intelligently placed attractive offers and discounts for foreign buyers. For NRIs it is safe not to convert their currency till the end of the transaction since the value of the rupee can hike or decline anytime, there isn’t any guarantee and nothing is predictable. 

Currency depreciation hits badly on Indian buyers. Already many face difficulty with the current price. Depreciation caused an increase in the price again. The cost of raw materials and transportation wages of workers are all affected. Therefore the property demand declined among Indian buyers. To attract buyer’s developers began to come up with many fresh offers like pre-booking, payment schemes, discounts, etc. Currency depreciation is reflected on rental properties too. As there is a shortage of properties, people will agree to meet any demands to rent an apartment. This resulted in gaining a huge rental profit for landlords. People become ready to compromise for a home of their choice. 

The currency depreciation caused a price hike on raw materials or building materials. These materials disappeared from Indian markets so builders need to import raw materials from foreign markets. This increased project costs. As a result, everything related to construction like engineers, workers, architects, design agencies, and all other micro units related to construction became more expensive. Currency depreciation affected the overall economy and GDP. Construction workers and hundreds of people lost their jobs. 

For local buyers, the currency depreciation affected them badly. Things become difficult and unfavourable for them. They become reluctant to invest in real estate due to the depreciation. The EMI rate will increase. Buyers find it difficult to adjust financially. Also, banks increased the interest rate due to currency depreciation. This indicated the expensive status of loans. 

Currency depreciation is the best time for beginners. If you are planning to invest in real estate you can confidently step forward. So begin your investment as soon as possible. The earlier you invest the more profitable you are. 

It is better to invest money in real estate during currency depreciation. The real estate sector is enjoying a wonderful time due to currency depreciation. The property value is increasing due to the economic crisis. It is safe to invest in real estate. The value of your property can get a huge hike. Due to the property shortage, your property will receive a good profit in the future. Or renting your property is advisable. Rental income can be used to meet your monthly expense or can be used as extra savings. In the real estate sector during the currency depreciation investing in a fully furnished home is more profitable than investing in an under-construction property that generated more rental income.

Conclusion

So in brief we can say that every coin has two sides. Similarly, currency depreciation in India too got two aspects: positive and negative. Some got benefited while others faced losses. The real estate sector celebrated the currency depreciation in India silently when all others are in trouble. Many NRIs and foreigners utilized this depreciation for expanding their resources. Many found it an opportunity to own a luxurious home in India. There are workers in real estate who faced hardships. But the increasing cost of property in real estate balanced the effect. Let’s hope for the end of currency depreciation in India. This is only a temporary phenomenon.

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