Are NRIs Buying only Luxury Properties in India?


Are NRI investors only looking to invest in luxury properties in the Indian market? NRIs have considerably scaled up their investments in the domestic market in recent times, especially after the COVID-19 outbreak. This new-found interest in luxury property is a direct outcome of the same according to experts.

Reports have clearly identified a trend after the outbreak of COVID-19 where a large number of NRIs are seeking properties in the domestic market for end-use. More than 50% of NRIs in various surveys in the country will be purchasing real estate in India in the near future for end-use. 47% of them will consider purchasing for investment purposes only. According to various reports, a major reason behind this trend reversal is that many NRIs are planning to come back to India in the future amidst uncertain pandemic-fuelled conditions and reduced employment/growth prospects worldwide. The top 7 Indian cities are clearly being viewed as the best possible options although many NRI buyers are also considering smaller or Tier-1 or 2 cities to live with their families.

There were many NRI fence-sitters in the period before the pandemic owing to multiple changes being implemented in the realty sector in India. Many were also inclined towards investing in commercial real estate. However, residential real estate has now become their priority owing to the effect of COVID-19 on employment prospects and global economies alike.

Some key points worth noting:

  • Almost half of NRIs in various reports showed a clear preference for luxury real estate units which are priced above Rs. 1.5 crore.
  • More than 1/3rd of NRIs prefer premium real estate units which are priced between Rs. 90 lakh and Rs. 1.5 crore on average.
  • Just a few are looking for homes priced between Rs.45-90 lakh while an even smaller number show interest in affordable properties.
  • Demand is soaring amongst NRIs for larger homes, explaining their growing interest in luxury real estate. Most NRIs are going for homes sized up to 1,500 sq ft or above with a minimum of 3 BHK configurations while some are looking for more spacious and bigger 2 BHK units. A major chunk also prefers 4 BHK or even higher configurations for apartments.
  • Cities like Chennai, Mumbai, Bangalore, Pune and tier-1/2 cities like Lucknow, Surat, Kochi, Chandigarh and Ahmedabad are highly in demand amongst NRIs.
  • Expats based in Gulf countries account for a major chunk of residential investments in India in recent times. Most NRIs are more driven towards investing in stable and long-term physical assets like real estate.
  • Owing to the depreciation in rupee values, luxury real estate has become more popular amongst NRIs who have higher purchasing power while tapping into discounts and offers given by developers.
  • Most NRIs prefer ready to move properties or those nearing completion. Many of them are also drawn to the record-low rates of interest on home loans in India at present.
  • Most NRIs prefer investing in properties built by branded and reputed developers known for offering good project quality and with solid track records.
  • NRIs are also investing in luxury real estate owing to their desire to get global amenities and other facilities.
  • They are giving higher priority towards amenities, the reputation of the developer and the location among other factors.

Of course, luxury properties fit the bill in terms of developer reputation, highly strategic and well-chosen locations, and also the best amenities which are akin to the international lifestyles that NRIs are used to back in their countries of work and current residence. This is why they are not averse to shelling out more for things like sports facilities, retail outlets, cutting-edge security features, greenery, and a lot more.

Many of them are looking to at least shift back to major metro cities near their hometowns or smaller cities, to be as close as possible to their families. At the same time, higher purchasing power of NRIs and attractive offers and deals in the market equate to their ability to purchase even more space at considerably lower prices than before. At the same time, developers are building integrated townships with self-sufficient facilities in peripheral areas of major cities along with other Tier-1 and Tier-2 cities, which are drawing NRI investors in large numbers due to their desire to stay with or close their families in their hometowns. At the same time, these projects are comparatively more affordable since they are built on the outskirts of major cities and NRIs are finding it a better option to invest in gargantuan spaces with every kind of luxury imaginable. This trend may continue well into the next few months or even years, according to industry experts.

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