Why should NRIs invest in Indian real estate?

 

As the market conditions are currently favourable for the NRIs to invest in real estate in India, here’s a look at how such an investment can prove to be fruitful

       Several industry leaders have vouched that real estate is one of the safest investment options in the long run for all kinds of buyers including the Non-Resident Indians (NRIs) .  The market situation is especially ripe now for the NRIs to invest and earn good returns, believe experts.

        In fact, according to Anarock Group’s recently released data, there has been a spurt in home purchases by the NRIs post-pandemic.  “In terms of preferences, more than 75 per cent of NRI respondents in our survey showed a preference for properties priced >Rs 90 lakh.  If we consider the housing sales between January and September 2022, there is at least a 10-15 per cent increase in demand from the NRIs as compared to the corresponding period in 2021”.

Depreciating rupee value

The past few months have seen the value of the Indian rupee hit all-time lows against the USD.  This has given hope to the NRI investors who are willing to invest in Indian real estate as this means they will have to spend less but earn good returns on their investment in the long run.   “The recent volatile stock market and the currency benefit of the rupee-dollar exchange have made it favourable for the NRIs to invest in real estate in India.  A large section of NRIs, previously aligned to the stock market as their primary investment instrument, have now shifted to real estate as a form of long-term investment”.

Transparency and government initiatives

The Government of India (GOI) has undertaken several initiatives to improve transparency in the real estate sector.  “The GOI not giving into the temptations of profligate stimulus spending has ensured a stable investment climate.  RERA has also now truly taken root, resulting in a much higher level of transparency, predictability, and trust – all very important factors for an NRI buyer.  This is now giving way to the corporatisation of real estate with an emphasis on good governance practices and improved transparency”.

      Talking about government policies, “To ease payment woes, the central bank has permitted cross-border payments for NRIs to settle domestic bills.” “Investment in real estate provides long-term returns through rental yield and value appreciation.  It also helps in creating a safety net and a safe base back in the home country for those working overseas.  Another important aspect is the simplified tax regime.  NRIs are eligible for indexation benefits with simplified taxation at 20 per cent of their properties in India.”

 

Pandemic and the global crisis

          The pandemic and the ongoing conflict between Russia and Ukraine have impacted several industries globally including real estate in India.  However, both these things resulted in NRIs opting for real estate in India not just as an investment, but also as their settling base in India.  The unpredictable situations around the world have made several NRIs realise the value of having a stable home in their own country.

          To give an idea about how the situation has turned worse, Pillai shares, “Most senior executives of global giants now strongly believe that recession is just around the corner.  NRI’s are thus now starved for real choices when it comes to investment options in their chosen countries”

         “Covid-19 pandemic has increased NRI’s emotional association of long-term security with physical assets.  This was also one of the key reasons stated by NRI respondents for buying homes in India now.  Against the backdrop of the ongoing Ukraine-Russia war and the stock market volatility, real estate seems the safest option for investment.  A majority of NRI’s are buying a home in India for end-use as well, and not just for investment reasons.”

Stable prices

          Real estate prices in India have either remained stable or appreciated, but haven’t seen a drop.  “On the other hand, the realty prices in the West and China are under pressure as the economies are slowing down and interest rates are rising rapidly, leading to a hike in the EMIs for the investors”.  This stability in the country is attractive for those looking for safe shores to park their money.

             “Prices are only set to rise in the next few quarters.  

Therefore, this is the best time to buy a home reap good ROI benefits in the long term.”