Since the outbreak of the Covid-19 pandemic, an increasing number of Non-Resident Indians (NRIs) are investing in real estate properties in India. While geopolitical tensions and global economic uncertainty – coupled with strong outlook of Indian real estate – make them turn to their homeland, depreciating value of rupee makes the investments even lucrative.
“According to United Nations estimates, 17 million Indians are spread across different regions such as the Middle East, Africa, Europe and North America. Every year, a considerable portion of this Indian diaspora turns to Indian real estate for investment. According to reports, the NRI sales in 2019 was $11 billion. Since then, this category has witnessed a rising trend. In 2022, it is expected to reach $14.9 billion,” said Prashin Jhobalia, VP Marketing Strategy, House of Hiranandani.
“The pandemic triggered the aspiration among NRI’s to own a home back in India. It acted as a financial security and made them feel connected to the country. Another reason that encouraged lakhs of Indians based in other nations to own a home in India was the depreciating value of Indian rupee. Since 2018 the rupee has been on a falling trend. It fell by 8.6 per cent in 2018, by 2 per cent in 2019 and 2020 and 1.5 per cent in 2021 and by 10 per cent in 2022 till date,” he added.
While these two factors prompted a renaissance in the Indian real estate sales, there are several other reasons that also acted as a catalyst in the Indian real estate.
Jhobalia lists some of the factors that encourage NRIs invest in Indian real estate:
Increase in standards of Indian real estate
Exposure to international housing standards and availability of technology stimulated the top Indian developers to create housing that matched the aspirations of prospects that were well travelled and looked for homes created as per international standards.
Today homes are perceived as a lifestyle requirement comprising spacious apartments, lifestyle amenities, green cover and accessibility to necessities. Presence of technology and international expertise facilitate strong construction quality and aesthetics of the high-rises.
Rapid infrastructure growth across cities has led to improvement in connectivity and rise of less popular locations. Tier 1 cities are connected to tier 2 and 3 cities through a robust network of road and transportation. Decentralisation of cities has also led to an increase in options for real estate.
Meanwhile, NRI interest is largely seen in select cities. Bengaluru is appraised to be one of the most preferred real estate investment destinations for NRIs in India. Mumbai Chennai, Delhi, Pune, and Goa are among others on the list.
Rera has enabled greater transparency in real estate transactions. This has increased the confidence of local and NRI home buyers. Consolidation in real estate has resulted in end of fly by night developers and led to growth of organised grade A developers.
The pandemic set off use of digital collaterals that can be accessed from any distance. As a result, a project can be introduced to a prospect through digital walk through, videos and images. During lockdown, the NRI buyers preferred using the digital enablers for knowing the project while being located away from the country. The ease and efficiency provided in real estate transactions ensured these were used even after the lockdown ended.
Capital investment with steady income
Investment in Indian real estate enables NRI buyers to own a capital-intensive asset at a low cost. It also provides a steady income in the form of rent.
Increased transparency, more flexible regulatory measures for NRIs, and improved real estate industry consolidation have resulted in an unparalleled expansion of India’s real estate business. Digital payments and advanced technologies have enabled NRIs to streamline the process of acquiring and transferring real estate properties, resulting in cost savings and a faster process of transactions.
“Potential home buyers are quickly acting on making real estate investment decisions in India, considering the favourable investment conditions. The Indian real estate market seems resurgent, indicating the scope of increasing demand for real estate assets in the present and future,” said Jhobalia.