NRIs continue to bet big on Indian Property Market

NRI investment in real estate

Viable property price options, increased transparency & attractive discounts are once again boosting the confidence of the home buyers.

NRI investment newsIndian Real Estate is reviving once again, as transaction volumes are picking up in major Indian cities. Viable property price options, increased transparency & attractive discounts are once again boosting the confidence of the home buyers. A stable & majority driven government in the center is further revitalizing the overall sentiments.

As Real Estate in India shows ascending tendencies, alongside domestic buyers, expats are also getting drawn towards the Real Estate industry in big volumes. Over the years expats or NRIs as they are called, have notably increased their foothold in the industry. As per the estimates by 360 Realtors, near around a quarter of the transactions in Primary Real Estate is coming from the NRI quarters. The company estimates that in FY 2020, the total NRI investments will amount to USD 12.5 billion, growing by more than 13% on an annual basis.

NRI investment in RE

Around 40% of the investments are coming from GCC country. Other sources of investments include North America, Europe & Asia Pacific. Most of the NRIs buy home in their hometown/ city, as many prefers to return back to India eventually.

Prudent Investment Choices

The vigorous growth in the NRI Investments in recent years is not just solely done for an end-use purpose in the retirement days. The buying decisions are also underpinned by prudent investment choices. Buying a home & letting it for rent can be a source of recurring income. As Indian economy looks upbeat for the mid-term (4-5 years), buying a home can ensure smart returns in the mid to long term for expat buyers.

The prices in the market are also very attractive as it has corrected over the past few years. A weakened Indian rupee is a further add-on. The market is also flooded with plenty of attractive offers as developers are focusing on turning around their unsold inventories. Looking at the present conditions, an NRI buyer can get a commutative discount to the tune to around 25%, when compared to the pre-2014 era, when markets were at its peak. These are indeed the best time to invest in the market to ensure smarter returns. Once prices will start moving upward, the expected returns will also ease out.

Hedge Against Future

Buying a home in India at a time, when prices are viable can also be a hedge against the future. As trade-war between USA & China is escalating, global liquidity flows are tightening. This is making the growth forecasts of some of the major economies look more conservative.

A dip in oil prices & the rising tensions in the Persian Gulf are also not auguring very well for the economic growth, especially in the GCC & Middle East region. Subdued growth sentiments are also impacting job markets resulting in the instances of job cuts & freeze in salaries.

The moderation in economic growth might not last long. Upside from the economic diversification & massive public sector investments into infrastructure will lead to economic revival. However, job markets are not going to be completely risk-averse as there is a growing emphasis on giving more job opportunities to the locals.

Amidst such situation, it is advisable to invest in a long term asset such as Real Estate now in India when prices are attractive & there are ample numbers of attractive deals & payment plans to capitalize upon. An asset such a Real Estate can ensure recurring rental yields & attractive capital appreciation in the mid to long term & hence can mitigate risk to a great extent.

[This is an authored article by Ankit Kansal, Chairman Founder and MD of 360 Realtors. All views, opinions and expressions are personal and limited to the author.]