NRI Real Estate Investment in India
Even with uncertainty looming almost everywhere, the Indian real estate market seems to be thriving. Buyers have become more active, and there’s an interesting demand from the NRI clientele, which shows tremendous growth in recent times. So, much so that at present, most of the realtors are relying on NRIs for sale. It has also been estimated that by 2021, the NRI investment in Indian real estate is likely to spike up to $13.1 billion.
NRIs from developed countries like the UK, USA, UAE, and Canada were already prime investors in India. India’s skyrocketing financial market has further triggered the psyche of Indians living abroad to look towards their own home country as an option to come back and settle down in the future. This is why investment in residential real estate has picked up, with 42% of GCC’s total inflow. Â
Interestingly enough, the investor demographic comprises age groups like 35 to 45 years of age, looking forward to investing in homes for their parents. The age group of 55 to 70 years, looking forward to having a home for themselves in their retirement years.
What Made the NRI Real estate Investment Fall Back in India?
Several reasons have lured NRIs to invest in a lucrative avenue of the Indian real estate market.
- Strict regulatory measures
- A significant drop in the rates of property
- Increased transparency in procedures
- Great consolidation in the sector
- The recent depreciation in the Indian Rupee Â
In addition to the above reasons, a paradigm shift in the economy during the last few years is a growth booster for India. The Indian economy as of today is above 2 trillion dollars.Â
Why Should NRI Invest in Real Estate in India?
Robust EconomyÂ
India has withstood the global financial crisis by having an economy with quality, resilience, and transparency and is supported by a strong banking sector.
Eminent MarketsÂ
Indian Stock Exchange is one of the oldest and biggest stock exchanges in the world. It is efficient, lower cost, and has a modern environment with returns on investment of over 15% per annum for the last decade.
Diversity in Investors
Due to the strong service sector, there has been a wide range of industries available for investment. Investors are also learning to gain enough understanding to invest in a knowledge-based industry.
Demographic dividendÂ
India being the youngest country, almost 64% of the total Indian population falls under the working-age group. Thereby there is a lot of scope and potential for productivity and innovation, thus enhancing economic growth.
The Rapid Growth of the MarketÂ
The Indian market is growing fast, and Indian investors are now shifting their focus to stock-based tools against traditional investments. The booming market and stock prices have made it a good time to invest in India.
Investor Friendly MarketÂ
With the Indian government becoming friendlier towards foreign investors and the RBI and SEBI formulating several policies and guidelines for encouraging FDI or Foreign Direct Investments, NRIs are driving their investment focus towards India.
As per several reports, India’s current NRI investments will be hitting an all-time high of INR 96 CR in FY 2021. The formation of RERA attributes to this all-time high real estate investment. NRI buyers now have more confidence to invest in India. They get a more simplified format of engagement and trustworthy developers and properties currently registered under RERA.Â
Commercial Real Estate Vs Residential Property Investment IndiaÂ
There has also been an exciting shift of focus in investment decisions across residential, commercial, and retail real estate. Earlier, these were the most preferred investment decisions as the investors look forward to the benefits of returns from these investments in rentals. However, today most of the floating inquiries in the real estate market are around residential properties, and that too primarily for end-users. The demand is not limited to luxury apartments; luxury or luxurious residential properties revolve aggressively around affordable and mid-segment housing and premium and luxury and super-luxury properties. Such inquiries are found mostly in India’s southern states like Chennai, Hyderabad, and Bangalore, while Mumbai and New Delhi follow the league.
Source: Emerging Trends in Real Estate
Demand for Ready Homes
There is also a high rise in the demand for ready-to-move-in properties that offer safety and protection and an assurance of the availability of all the essentials of a modern lifestyle. There is also a growing demand for ready-to-move-in houses or near-completion projects due to no goods and service tax (GST) payable on resale flats. Adding to this, NRIs now have to shell out a lesser amount of capital to buy a home due to the recent depreciation of the Indian rupee and have a profitable deal in their hands.
Consumer demand is on a hike in these markets; more home buyers, not only Indian but NRIs, are quickly taking advantage of the prevailing favourable conditions to buy their dream homes in their homeland. The realty search portal shows a massive 254% increase in inquiries, mostly for ready-to-move-in families, from the NRI clientele since March this year. The residential properties amount to 76% of the searches, while the commercial sector has 12% inquiries. The reason is that managing a residential property is much easier than compared to handling a commercial one. Also, residential property prices decrease with the home loan interest rates diving more profound than the 2008-2009 interest rate levels, making investing in residential property more advantageous.Â
Source: https://www.cbre.co.in/en/research-reports/India-Real-Estate-Market-Outlook-2019Â
Growth expectations in these sectors are as follows –
- Â The hospitality sector expects steady growth.Â
- The retail industry expects an overall high growth.Â
- The commercial industry expects stable growth for the services sector, which will drive demand for commercial real estate.Â
- Urbanisation trends will continue the growth in the residential sector.Â
Major metro cities are now providing flexible real estate investment options to NRIs, which has led to increasing demand for other real estate avenues such as office spaces, mall spaces, co-living and senior living in residential, co-working the commercial sector, and even a space for warehousing.
In the end, not to forget a fascinating insight that investing in real estate, even on a very small scale, remains a tried and trusted means of building an individual’s wealth.
Assetmonk is one of the trusted platforms for NRIs investing in the Indian real estate sector. WIth high growth potential deals from India’s best metropolitan cities, secure investment process, and IRR up 21%, Assetmonk investment opportunities are considered the best choice for NRI investors.
Real Estate Investment for NRI FAQ's:
For an NRI Is would prove beneficial to Invest in Real Estate in India in 2021. According to statistics, 2021 is going to have great potential for both commercials as well as residential real estate companies. In the last couple of years, co-ed offices and other commercial spaces have gained impressive tractions in most of the cities with IT players contributing a ton to the majority of the demands.
When NRIs invest in properties in India they get to invest in India and this helps to further bolster India’s economy. Foreign investors are also a crucial source of funds for the Indian economy. Currently, NRIs can easily invest in the Indian property market through a professional and take advantage of booming growth.
By the time of 2040, the real estate sector is expected to grow to 65,000 crore INR ($9.30 billion) from a previous 12,000 crore INR (US$1.72 billion) in 2019. And this is expected to contribute to a huge chunk of 13% of the country’s GDP by the time of 2025.
The chances of any sudden increase in prices are fairly low and one can expect to see a change of 6-10% in the coming months. Any moment when the prevailing prices in the realty sector would be at their bottom, that would make it the appropriate time to invest in real estate.
Selling the property around April to June would see one entering the market that traditionally would have a fairly large number of buyers and this is the time when most properties sold. But the best time to purchase a property would be the Spring months, as this is the time when the demand is usually low. One should note that this may change in the future.
The moment when one get’s access to the right investment tools, one doesn’t even have to ask whether it is a good time to invest in real estate. Any moment is an appropriate moment to invest. However, some housing sectors would always remain tougher than the others, but with the right knowledge, tools, and expertise, one would be positioned to make decisions with confidence and ease.
Real estates and stocks include different risks, opportunities, and gains. Real estates are not as liquid as stocks but need more money as well as time. However, it does give a passive income stream.
Commercial properties present more earning potential than residential real estate. Although it would be easier to buy a residential property, commercial agents do get a higher commission from the property they sell.
One can easily sell residential properties but needs to be licensed to sell certain non-residential properties; i.e, commercial, industrial, or retail properties
As per the Income Tax Act, if an NRI owns more than one residential property, only one of them will be considered as self-occupied. And, there would be no income tax upon a self-occupied house.