The Indian real estate seems to have turned attractive to NRIs. Earlier, two factors dominated their decision of real estate investment in India -
1. The emotional connection and their retirement plans in India.
2. NRIs get an advantage of depreciating value of Indian Rupee compared to the dollar and other foreign currencies.
Hence, property buying in India for them becomes a cheaper deal.
At the same time, the lack of transparency and safety concerns in the real estate industry always limited the contribution of NRIs in their home country. However, dynamics have recently changed with the introduction of government policies like RERA. The industry is more organised and transparent, and the impact of which has benefited both the Indians citizens and NRIs. Considering the value of the dollar in India, the year 2019 witnessed the mark of ₹ 70 for one dollar. The value continues to remain the same and even crossed ₹ 70 mark in recent times. As a result, the involvement of property investment by the NRIs grew, and the trend is predicted to rise more. Such a phenomenon has occurred for the first time in the last 5 years. Real estate investment by NRIs was recorded at 6 per cent during the financial year 2014-15, whereas the investment in the current financial year has almost doubled and stands at 11 per cent.
NRIs living in the following countries have contributed the most in Indian real estate - Saudi Arabia, UAE, Oman, Kuwait, Qatar, Bahrain, North America, Canada, Singapore, Malaysia, Japan and Korea, and few European countries. A handful of factors for them to invest in the Indian market has now extended to many. Learn about the promising changes that the government has brought in and the way industry functions:
1. The shady or fly-by-night builders in the country gradually disappeared with the implementation of the Real Estate Regulatory Authority Act in 2016. The act has made registration of every project mandatory with the government. The buyers are given an assurance of transparency and security. The developer by rule is supposed to deliver the property within the promised period.
2. Earlier, the interest of NRIs was solely in metro cities such as Delhi, Mumbai, Bengaluru, etc. The Smart Cities Mission by the government emerged as a game-changer. The Tier-II Indian cities found a more significant recognition. The infrastructure and economic condition of these cities improved, and the interest of NRIs shifted accordingly. Thus, NRIs have now built an opinion that investment in Tier-II cities is lucrative as well.
3. Besides the residential projects, NRIs have started spreading their vision towards commercial real estate. The commercial market alone has broadened its spectrum with the inclusion of IT parks, office spaces, co-working spaces, and serviced apartments wherein shopping malls, hotels, companies, and more were already doing well. Demand in the commercial sector seems to be rising year after year and produce high yields.
4. The reforms in Foreign Direct Investment (FDI) and Real Estate Investment Trusts (REITs) favouring NRIs play a pivotal role.
By the year 2022, NRIs investment in the real estate sector is predicted to be around 30-35 per cent.