According to Shajai Jacob, CEO – GCC, ANAROCK Property Consultants, “To paraphrase Warren Buffet, a time of fear is a time for opportunity.” He explained, “While all economies are shaken at the moment, it is in such times that smart investors buy into their preferred asset classes. For NRIs, opportunities back home are even more appealing with the fall of the Indian rupee. As the equity markets continue to vacillate, NRI investors had become wary of the stock markets and fell back on gold, real estate and bank deposits because of the relative security of these products.”
Interest rates plummet
Amidst the turmoil in the Indian banking sector and SBI, the country's largest lender, reducing interest rates on savings accounts and fixed deposits, NRIs are now averse to trusting banks. SBI reduced interest on savings accounts to 3% for all categories from the earlier 3.25% for accounts with less than one lakh rupees and 3% for accounts with more than one lakh rupees. Moreover, the interest rates for fixed deposits for a tenure of fewer than 45 days have been trimmed by 50 bps, meaning that they will earn 4% instead of the earlier 4.5%. For tenures of one year and above, SBI FDs will now earn 5.9% instead of 6% - the lowest since August 2004.
Real Estate Vs. Gold
According to Jacob, “Real estate is clearly a superior option for NRI investors. With the sector-wide turbulence caused by the COVID-19 pandemic and the oil price war pushing oil prices to as low as $32 per barrel, gold prices peaked and then reduced in the past few weeks. After opening March at Rs. 4274 per gram, gold prices jumped by more than 6% to reach Rs. 4536 per gram and are now once again on a downward trajectory. Only early investors could book profits in this asset class.”