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Here’s why NRIs are bullish on Indian Realty

Here’s why NRIs are bullish on Indian Realty

by Pratik Kataria, Director, Sainath Developers and Committee Member, Naredco Maharashtra

Amid economic uncertainty, monetary tightening and global headwinds, Indian real estate remains one of the green shoots of resilience. The International Market Analysis Research and Consulting (IMARC) Group in a forecast for Indian Real Estate has predicted a CAGR of 9.2% for the industry for the 2023-28 period.

Inevitably, survey after survey finds the Non-Resident Indians (NRIs) choosing real estate as the preferred asset class for investment over gold, fixed deposits and mutual funds. A CII-ANAROCK Consumer Sentiment Survey quoted by a business daily in November 2022 said that for 70% of the surveyed NRIs real estate was the best investment among all other asset classes.

The lure of real estate for NRIs

A home/property in India is often not just a financial but an emotional decision for NRIs as it further strengthens their link with their homeland. The emotional appeal notwithstanding, several monetary factors make Indian real estate a lucrative investment for NRIs.

The depreciation of the rupee vis-a-vis the dollar from Rs 74.5 at the beginning of 2022 to Rs 82.07 at present has made real estate investment cheaper for NRIs, particularly those who live and work in countries with strong currencies. With interest rates rising in many developed countries, including the US, premium real estate in India is far more affordable for NRIs than in the US or other nations.

Moreover, with the pandemic, many NRIs are now location agnostic hence, they prefer to work from their hometowns to be close to their family.

The Double Taxation Avoidance Agreement between India and several developed countries has ensured that NRIs can claim credit in their country of residence for taxes incurred on income (rental/capital gains) on property in India. This too makes real estate an attractive investment.

Ease of investment

Indian real estate has also benefited from the reforms initiated by the Centre over the years. These reforms, particularly the Real Estate Regulatory Authority (RERA) Act, have been a game changer for the industry. RERA deserves a special mention for making real estate transactions more transparent, unambiguous, and the projects time-bound.

Changes in regulations pertaining to stamp duty, GST, and improved regulatory controls have further boosted investor confidence on Real Estate Assets in India. RBI has also made efforts to ease the investment environment for NRIs, who can now buy commercial or residential properties without a nod from the Central Bank.

This does not mean that Indian Real Estate is the easiest to navigate but it has come a long way with virtual property shows and digital transactions replacing the bureaucratic mess of paperwork that was earlier associated with buying a home/property.

Many developers these days also offer the entire bouquet of realty services, including taking care of all the documentation needs, helping NRIs access loans and so on in order to make the real estate investment experience hassle-free.

NRI Investment hotspots

So where are NRIs investing? Tier-I cities continue to attract most of the NRI investments in real estate, mainly luxury homes and condominiums. As per one survey, the Mumbai Metropolitan Region (MMR), National Capital Region (NCR), Hyderabad and Bengaluru are among the top four cities/regions for NRI realty investments.

Tier-II cities and micro-markets like Pune, Surat, Kochi and Coimbatore also continue to attract NRI investments. Developers in these cities are coming up with projects exclusively catering to specific requirements of NRIs. In general, expats prefer to invest in their home cities or towns.

Many investors may also be taking the Real Estate Investment Trusts (REITs) route to own a chunk of Indian real estate. Data on NRI investment in REITs is not widely available but they allow NRIs to own a piece of Indian real estate without the bother of paperwork and the expense associated with maintaining an asset.

One estimate by Statista pegs the NRI investments in Indian real estate to be around $25.7 billion in 2022. In the future, we can expect this to grow by leaps and bounds.


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