NRIs are steadily investing in real estate back home, i.e. in India. While the return of NRIs to the domestic market is a welcome development, it has been majorly fuelled by the COVID-19 pandemic and the deep-rooted desire for owning property back home for sentimental and security reasons amongst NRIs.
NRI investments have picked up tremendously in India after the coronavirus induced lockdown. The pandemic has changed home buyer perceptions in this segment, with more NRIs looking to own homes in their hometowns and cities. Multiple State Governments have come out with market-boosting reforms while developers have offered attractive deals on new launches as well. NRIs are now increasingly choosing home ownership over rentals in their hometowns and native places.
Key Developments Worth Noting
- Reports indicate investments of a whopping $13.1 billion by NRIs in Indian realty for FY21. Experts predict inflows to increase by 12%, touching potentially $14.9 billion for FY22.
- NRIs are more inclined towards buying real estate back home owing to factors like favourable currency trends, lower property prices and interest rates and the rapid digitization of the property market with technology being a key purchase enabler.
- Digital property inspections, virtual tours, easy documentation and paperwork along with safe payment procedures are making it easier to invest in real estate as far as NRIs are concerned.
- NRIs have always bought real estate in India traditionally for rental income. However, the pandemic has changed perceptions, with this segment of buyers waking up to the need for a second home in their hometown or city and also with a vision towards settling down in the future at some stage. Many are choosing options to permanently WFH while some are looking at hybrid working models as well.
- NRIs are choosing bigger spaces and projects with modern features like EV chargers, temperature-controlled swimming pools, app or phone-based automation and remote surveillance, easy access to wellness and healthcare amenities along with supermarkets/shopping malls, open spaces and greenery and connectivity to airports along with top-notch security features.
- NRI buyers are also drawn to attractive and low property prices in the current scenario along with stamp duty cuts and similar measures by various State Governments in addition to low rates of interest on home loans.
- Many NRIs have job limitations and uncertainties abroad and are willing to create a safety net in major Indian cities for future opportunities and a probable shift. Some coveted locations include the MMR, Bangalore, Ahmedabad, Pune and areas in the NCR such as Faridabad and Ghaziabad.
- Younger NRIs are looking at more affordable properties in peripheral zones of cities with larger homes and more amenities. Tier-II cities that are connected to upcoming industrial corridors such as the Bangalore-Mumbai Economic Corridor or Delhi-Mumbai Industrial Corridor, are also seeing higher NRI demand.
- Almost 80% of NRIs seeking to invest in India are reportedly eyeing their hometowns. More than 80% are reportedly doing this for more security. 70% of NRIs, as per various surveys, are even considering taking up comparatively lower-paying employment in their hometowns owing to the prospects of better quality of life. Retiring NRI professionals are clearly interested in coming back to their hometowns and cities.
- NRIs also prefer cities like Chennai, Coimbatore, Kochi, Chandigarh, Thiruvananthapuram, Hyderabad, Mumbai and Pune for investments.
- Many NRIs are looking at Tier-II cities for investments, in their pursuit of higher returns and the next wave of growth. They feel that cities are now saturated and congested, offering little scope of gaining more space and a pollution-free ambiance.
Some Other Market Trends Seen in Recent Times
- NRIs, especially from the USA and Gulf countries, are making a big splash in the holiday home segment of the market too.
- They are buying themed, luxurious and bigger villas akin to the lifestyle that they themselves cherish in foreign countries.
- Real estate developers are also offering attractive deals on holiday homes along with RERA deadline postponement under Atmanirbhar Bharat schemes have motivated more NRIs to invest in luxury homes, especially in locations like Goa.
- Several reports have highlighted how NRIs from the GCC are still the major investors in India, accounting for a handsome 41% of overall inflows from expat communities abroad. Those in the USA contribute a decent 17% to this tally while Singapore contributes around 12%. Other major NRI markets for the Indian real estate sector are the United Kingdom (UK), Canada, Kenya, Germany, and South Africa.
- NRIs invested reportedly $6 billion in FY14 and today, this has gone up to a staggering $13.3 billion for FY21, indicating compounded annual growth rate (CAGR) of a little more than 12%.
- NRI investments are forecasted to increase even more in the near future, owing to a major shift towards digital platforms by real estate developers and platforms along with concepts like virtual and augmented reality based project designs, 3D walk-throughs and viewing, digital project launches, online sales transactions and virtual real estate shows.
- Real estate has steadily gone digital while the overall industry recovery and pro-active Government policies are other reasons for the renewed confidence of NRI buyers in the market.
Going forward, expect NRI investments to drive handsome sales growth in key Indian metros along with well-connected Tier-II cities which are witnessing good infrastructural growth.
