NRIs Continue to Find Value in Real Estate Back Home

BY Realty Plus

By Anupam Rastogi, Principal Partner, Square Yards Frank Baum hit the nail on the head for generations to come when he honestly opined-There is no place like home. For Non-Residential Indians (NRIs) living and working away from home, it couldn’t be truer. No matter how much they adapt to new cultures or become global citizens, NRIs still remain connected to India in multifarious ways. In fact, their love for the homeland is quite visible in the Indian real estate market, which receives a sizable chunk of investments from NRIs.

The verdict’s clear on this one; going by market trends, NRIs continue to find greater value in investing in property back here in India. The whys are many, including the stable Government in the country, pro-active reforms like RERA and GST, and the fact that India remains one of the world’s fastest growing economies.

NRIs prefer investing back in Indian real estate in order to stay rooted and act on their sense of belonging. They are also finding greater investment value in the Indian property market, with robust and rapid infrastructure development and transformation of localities on the outskirts of major cities along with price appreciation.

The Government has announced an infrastructural push to the tune of Rs. 100 trillion in the Union Budget for boosting employment and the real estate sector alike. Affordable housing has already got infrastructure status while the exemption of an additional Rs. 1,50,000 for home loans in this category is a masterstroke as many believe. These are some of the many pro-active measures attracting NRI buyers, including lower GST, better rates of interest and most importantly, higher transparency in the sector.

It’s not just about NRIs investing in real estate back home out of personal affinities or pure sentiment; they have strongly defined preferences as well.

Last one year’s NRI sales data at Square Yards presents the picture quite illustratively in this regard (by way of number of transactions)

Percentage Breakup of NRI Property Transactions – Square Yards [August 2018 to July 2019 | Percentages rounded off to next whole number]

Residential Commercial 2 BHK (Residential) 3 BHK (Residential) 1 BHK (Residential) 56% 44% 48% 26% 26%

Coming to the property ticket size preferences of NRI investors, here’s what you need to know (by way of number of transactions): Percentage Breakup of NRI Property Purchased Value – Square Yards [August 2018 to July 2019 | Percentages rounded off to next whole number]   < Rs. 50 lakhs 72% Rs. 50 lakhs-1 crore 24% Rs. 1-2 crore 4%

*includes residential and commercial properties in mentioned property values only

As can be seen, the affordable housing segment is doing well even amongst NRI investors followed by the mid-range housing segment and an overwhelming majority prefer investing in 2 BHK units.

The sales findings debunk the myth that NRIs only prefer investing in ultra-luxury or luxury homes. Current data clearly shows that they now invest in properties across the entire spectrum, right from the affordable to the premium housing units.

While many NRI investors rent out their homes in India to generate some additional income, some do keep it for personal use, particularly if the families come down once or twice a year or if they have family members here. Some also invest in property back in India for shifting after retirement. In this scenario, a trend has been seen where NRIs hailing from semi-urban and rural markets often prefer investing in metro cities or prominent tier-1 or 2 cities for life after retirement as an upgrade of sorts.

Real estate developers should realize that NRI buyers make up a sizable chunk of their customer base and that here are buyers for whom money is mostly a non-issue. Instead, property security, privacy, investment value and good amenities are the key sales drivers for them. This is not such a hard combination to come up with for seasoned and reputed Indian developers, and many of them have sensed this as well.

Of course, the adage of location, location, location continues to play a vital role. Many NRIs we know wouldn’t buy property unless it was located in close proximity to the Airport or at least a major transit point. These are some aspects that builders need to work on along with implementing world class project standards to make the NRI buyer feel at home.

The effort will always be worth it, going by the surge in NRI transaction volumes which are predicted to remain steady over the next few years at least.

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