Over the years, NRI property investment in India has witnessed a considerable growth in the real estate market in India. Post-introduction of the Real Estate Regulatory Act (RERA) and Benami Bill, the property market in India is looking very attractive to the Non-Resident Indian (NRI) and the Overseas Citizens of India (OCI) who wants to invest there.
The current infrastructure and new policies, the government has now made easier, cheaper as well as increased transparency encourages investments from NRIs in the property market in India. According to recent research by a private agency, investments by expats or NRIs in the property market stood at just 6 per cent in the financial year 2014-15. However, the report showed that the figure of investment by NRIs has already exceeded to reach the 11 per cent mark in the current financial year. The study predicts that in the next financial year, the figure is expected to reach 12.5 per cent. Investments by NRIs in Indian property market are projected to reach around the range of $13.5 billion by the end of the next financial year.
Gulf countries are one of the biggest sources of NRI investment including Saudi Arabia, UAE, Oman, Kuwait, Qatar and Bahrain. Around 40% of the investments are coming from them. Other sources of investments include North America, including Canada, as well as from certain European countries and the East Asian countries including Singapore, Malaysia, Japan and Korea.
Tier-2 and 3 cities are emerging as NRI investor favourites
NRI property investment is taking a new turn in India as these investors are favouring fast-expanding tier-2 and tier-3 cities. Due to lower property prices and improving infrastructure, cities like Jaipur, Pune, Bengaluru, Bhubaneshwar, Hyderabad and Kochi have become the favourite destination for real estate investment in India. Most of these cities are enjoying the benefits in terms of infrastructural development covering connectivity, transportation, social amenities, and physical infrastructure. Metro corridors, new commercial hubs, airports and initiatives such as the bullet train between Mumbai and Ahmedabad naturally offer ample price appreciation and improved demand in the future. Besides, many NRIs are driven to buy a property in their hometown as they prefer to return India at some point of time instead of permanently settling abroad.
What is driving NRI's to invest in real estate in India?
The recent regulatory changes in India has brought in transparency and accountability in the real estate sector, boosting the confidence of NRI investors in India. With the various provisions of the Act, the government has instituted proper redressal mechanism for Grievances of NRIs. Also, the falling rupee gives more power to other currencies and the current sluggish realty market enables Indian expatriates to purchase properties at a lower rate in India. They get more square feet of space for the same amount in foreign currency.
At the same time, Indian builders and developers have been offering discounts and freebies, to attract more investors to this diversified market. These discounts are generally available for the first-time NRI property buyers in both the residential and commercial segments of the market, particularly during the festive season every year.