By ManjuYagnik, Vice-Chairperson NaharGroup, and Sr. Vice President, NAREDCO – Maharashtra
Indians from around the world have remained interested in investing in India’s real estate sector for a major part over the years. India has been a preferred real estate investment for the NRI faction from nations like the United Kingdom, USA, UAE, Canada and Australia. India’s real estate industry is attracting NRI audiences from the age group of 35-40, who are looking at investing in homes for their parents and also investors from the age group of 50 – 60, who are looking to invest for their retirement homes. Together this NRI audience invested a handsome sum of over USD 13 billion last year and it is expected to grow by 12% this year as per a recent industry report.
So what is attracting the NRI investors towards the Indian market? Here are some key reasons for this:
- Fluctuations in India’s currency value: With the value of Indian Rupee dropping down to around INR 80 levels compared to the USD, real estate investment in India has become significantly more lucrative for the NRI audience. Apart from lapping up affordable spaces, affluent NRIs are also looking at this as a golden opportunity to invest in luxury real estate deals which would fetch them a fairly handsome ROI within the next 5-6 years.
- Fast growing economy: Despite multiple challenges, India has emerged as one of the fastest growing economies in the world post the pandemic. The Indian economy is expected to grow at a healthy rate of over 8% over the course of next few years, which augurs well for the NRIs. The fast-paced economic growth would also have a positive impact on the increase in real estate rental prices of the future. Apart from residential investments, NRIs will be encouraged to also look at investing across commercial spaces, warehouses, co-working spaces, etc.
- Growth from Non-Metros: Emerging towns of India are witnessing growth at breakneck speed with the emergence of WFH and remote working in India. The Central and State governments are also focusing on improving the overall infrastructures of tier 2 & 3 cities which are high-potential markets. Additionally, a large chunk of the young workforce or millennials is now investing in real estate across Tier 2 & 3 cities for work-life balance, well-being, and future security. Tier 2 cities in India are also emerging as industrial corridors and commercial hubs for emerging industries and could become hotbeds for future growth of the economy and the real estate market in particular.
- Rental income: Be it residential or commercial real estate, NRIs could be rest assured of creating a handsome income source through rentals. Most NRIs do prefer making multi-year agreements so as to save their registration costs as well. With India fast tracking its digital adoption as well, NRIs can now manage their properties remotely from the comfort of their homes.
- Increased transparency: With the introduction of RERA, the Indian real estate spectrum has become more transparent than ever. The regulatory body ensures customers receive all the possible information on the developers and their projects along with completion and delivery timelines as well. Easy availability of information on project approvals and customer-centric legislative processes have further given confidence to the market and buyers. Along with RERA, a strategic streamlining of approval processes has helped increase the confidence level of local and NRI investors which would further expedite the growth of the sector.
- Diverse Portfolio: Apart from investing in multiple asset classes like equities, bonds, gold, mutual funds etc., investing in India’s real estate enables the NRI to create a diverse investment portfolio. Real estate investments enable them to mitigate their financial risks and build a tangible asset from a long term perspective.
- Investor Friendly Market: The Indian government is constantly evolving its policies to create a far more transparent roadmap for foreign investors. With regulatory bodies like RBI and SEBI also formulating proper investment guidelines, NRIs are driving their investment focus towards India with a single minded focus on long term returns.