Why Do NRIs Want to Invest in Indian Real Estate?

The Indian real estate market has been evolving for a few decades now and by this time, it has experienced remarkable growth. Moreover, Non-Resident Indians (NRIs) hold a considerable role in this evolution. With respect to their hybrid work contracts, wish to return to their home country, and desire of leading a high standard of life, NRIs tend to purchase properties in India as it makes their dependability easy.

Real estate investment in India is undoubtedly a lucrative prospect for NRIs that increases their financial returns potentially and helps them maintain a profitable portfolio. Moreover, NRIs living in the US, Canada, Europe, and other Asian nations exhibit an evident preference for investing in top cities like Gurgaon, Bangalore, Hyderabad, etc.

What Indian Real Estate has to offer to the NRIs?

NRI's interest in purchasing spacious homes has also increased in Tier 2 cities like real estate in Gurugram. After the pandemic, there was a great shift in the dynamics of Indian households. As a result, many people now opt to live with their families strengthening the extended family system. After the pandemic, the demand for spacious and modern homes got fueled followed by the trend of working from home. Also, professionals have a precise desire of having more room to set up their workstations properly in houses.

In order to hedge against currency fluctuations, NRIs tend to shift their focus on investing finances in real estate and hedge against fluctuations in currency, the fall of the rupee has also increased demand for properties. The increased demand for residences from NRIs is causing real estate developers to create properties with improved amenities. According to recent trends, NRIs are looking for large, smart, and modern places that may accommodate their flexible or energy-efficient "new normal" lifestyle. They want gated communities with open areas close to the city and well-connected and self-sufficient. These residential townships provide a better quality of life since they provide all the facilities an NRI would need, including academies, hospitals, sports venues, shopping centers, and more.

Indian Real Estate Offers High Potential for Returns

Despite rising construction prices and a high hike in the repo rate in 2022, the real estate sector has experienced a considerable comeback. After a protracted period of economic stagnation, NRI investment in Indian real estate is finally able to take a deep breath this fiscal year. In Tier I, II, and III cities, the industry has seen a comprehensive recuperation this year after two years of lockdowns triggered by the pandemic and the following economic disruption. A behavioral change towards digitization will also lead to an increase in fractional investments in commercial assets and boost returns. Overall, real estate will continue to be one of the best asset classes for investments, and now that the pandemic has subsided, the commercial market in the nation's largest cities is expected to flourish.

NRI investment in India has come a long way from being an ineffective market to a transparent one in the real estate industry. With the emergence of technology and real estate laws, NRIs can own and transfer real estate in a more specified and streamlined manner even if they are not physically available in India. The real estate boom in India, higher transparency standards, the depreciating value of the rupee, and stricter real estate regulations are all driving increasing NRI demand for property. This trend of delivering the significant potential for returns is expected to continue for a longer period of time owing to the resilience of the real estate sector.

Factors that Encourage NRI Investments
1. Robust Economy: India's growth has been accelerated in recent years by a significant change in the economy. India currently has a GDP of more than $2 trillion. India's real estate market is of a high-quality, resilient, and transparent, which is supported by a strong banking system.
2. Reputable Market: The Indian real estate market is efficient, less expensive, and has modern property options at prime locations that boast returns on investment of over 15% annually. The market is reputable and attracts high NRI Investors.
3. Financial Dividend: India is the youngest nation in the world, with more than 64% of its citizens being of working age. Because of this, there is room for increased productivity and innovation, which will speed up economic growth. The evolving economy encourages NRIs to make investments.
4. Quick Development of Real Estate Market: Numerous top property developers work towards building iconic and profitable property options in the market. The developing locations lead to the market's fast growth and induce investments among Indian and NRI investors. The market and stock valuations are growing, making now a great time to invest in India.
5. Investor-Favorable Market: NRIs are becoming more inclined to invest in Indian realty as a result of the Indian govt. being more accommodating to foreign investors and the SEBI & RBI adopting many regulations and guidelines for boosting FDI. Numerous projections predict that NRI investments in India will reach a high record making real estate investments. After the RERA law, NRI investors now have more faith in making investments in India.
Below are several justifications why NRIs choose to invest in the Indian real estate market:
- Stringent regulatory measures
- Significant drop in the property rates
- Grown procedural clarity
- Major sectoral consolidation
- Drop in the worth of the Indian rupee
Takeaway
In the Indian real estate market, the great extent of transparency has taken the place of an opaque and inefficient one. With the significant evolution in technology, NRIs can now own and transfer real estate in no time without being physically available in India. India's real estate boom, higher transparency standards, a declining rupee, and stronger real estate regulations are all contributing to the rise in NRI house demand. The real estate market's strength suggests that this trend will continue for some time.