Authored by : Gunjan Goel, Director at Goel Ganga Developments
The real estate market in India has seen a considerable rise in investments by Non-Resident Indians, especially those living in the Gulf countries. This has given India’s real estate sector a fillip and has created a special bridge between the Gulf and the Ganges since the emotional and economic linkage essentially binds NRIs with their motherland. The NRI real estate investment schema has been going up the graph, which presumably accelerated more in the last ten years. Going by recent reports, NRI investments in Indian real estate are expected to grow 12% annually, scaling a massive $14.9 billion by 2024. This kind of money supply is sure to reshape the real estate landscape even in major Indian cities, and those of tier-2 towns.
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Several factors have come together to usher in this increasing interest of NRIs in the Indian real estate market. Owning property in India is a way of maintaining roots and securing a future home for retirement-specifically among NRIs. The emotional connect is great, driving these investments. Besides, the strong economic development of India and the promise of high returns on investments in real estate make the proposition quite inviting to NRI investors. Several policies have also been formulated by the Government of India with a view to motivating NRI investment through easy procedures and tax benefits. The depreciation of the Indian Rupee against most major foreign currencies has made Indian real estate relatively affordable for NRIs, thus offering them a currency advantage. The Real Estate Regulation Authority, or RERA, has helped in bringing much transparency and accountability from the sector, thus creating more confidence among NRIs.
While NRIs have invested all over India, there are hotspots that have emerged. Metro cities like Mumbai, Delhi NCR, Bangalore, and Chennai continue to be favored destinations due to better infrastructure and job prospects. But tier-2 cities like Pune, Kochi, Coimbatore, and Ahmedabad are now gaining momentum on the back of better affordability and growth prospects. Many NRIs also like to invest in their native states or cities, thereby pushing up demand in regions like Kerala, Gujarat, and Punjab.
The trend of NRI investments in various property types reflects requirements and investment strategies. Residential properties have been the sought-after assets, ranging from luxury apartments to villas and gated communities, especially in the metro cities. Commercial properties, comprising office spaces and retail properties at strategic positions, have been in demand for NRIs, as these properties promise rentals that are long-lasting. Plot investments in developing areas are seen as long-term investments with high appreciation potential. The affordable housing segment, with its volume-driven growth, is also attracting some NRIs due to government support.
Nevertheless, there are a number of pitfalls that the NRI investors will have to negotiate. For example, it is difficult to manage properties from a distance; hence, most NRI investors prefer projects that offer professional management services. For the NRIs, India’s real estate laws and tax regulations remain difficult to fathom, for which they seek expert advice. The Indian real estate market can be pretty unpredictable, and going by the market researcher, one needs to time the market correctly. Variation in exchange rates can result in huge difference in returns on investment.
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NRI investments have surged into the Indian real estate sector, thereby affecting developers to rise above in presenting suiting standards for NRIs, which ultimately benefits the market as a whole. The absolute necessity of managing properties from a distance brought faster acceptance and utilization of proptech solutions. There is a lot of money inflow due to NRI investments, which ensures foreign exchange and local economic development. Such investments act as a shock absorber to prevent the slowing down of domestic markets and have thus helped in the stabilization of the market.
The future of NRI investments in Indian real estate from the Gulf to the Ganges also looks very bright, with a number of trends shaping the future. Digital transformation will facilitate easier investments, from virtual property tours down to online documentation and blockchain-based transactions. Growing awareness about climate change is likely to drive NRI interest in green and sustainable real estate projects. Investment avenues like REITs and fractional ownership are finding more acceptance among NRIs desiring diversified exposure to real estate, albeit at lower capital requirements. Continued support in the form of policy initiatives by the government and therefore possible relaxations on FEMA may further ensure NRI investments.
The flow of investments from the Gulf to the Ganges is more than the financial transaction; this points to eternal bonding with the homeland.
The established fact has been a driver for NRI investments in India’s continuously evolving real estate market, which is replete with challenges and opportunities. Hence, NRI capital and India’s burgeoning real estate sector continue in a very important symbiotic relationship, one that will shape the urban landscape and economic future of the country.
When invested in Indian real estate, NRIs have to be duly equipped with proper research, professional advice, and a long-term view to work their way through this dynamic and promising market. With such investments, as the ties between the Gulf and the Ganges grow stronger, so will the Indian real estate market from the continued inflow of NRI capital, expertise, and global perspectives.
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