The Indian real estate sector is booming given the government's thrust towards infrastructure development which has resulted in improved connectivity and ease of travel within cities and across the country.
This improved connectivity has opened new vistas for people to invest in evolving assets like holiday / second homes which provide regular and attractive returns in the long term. Not to miss this attractive opportunity, NRIs from the Gulf region are showing a growing interest in investing in these holiday homes, anticipating potential future capital appreciation offered by these assets for investors.
Karjat and Alibaug
This has attracted a number of such properties to develop increasing interest among the NRI and HNI community as well.
There are a number of factors that have contributed to making NRIs look at investing in the Indian real estate sector. These include the favourable exchange rates between Gulf currencies and the Indian Rupee, which makes it attractive for NRIs to invest here. Also, most NRIs invest here to earn on rental income given growing demand in the market. It is also a good opportunity for them to diversify their investment portfolio.
There is a growing interest among NRIs and HNIs to invest in luxury second homes as they can rent out these properties and generate a steady rental income, since they live abroad. Generally, such properties are located at prime tourist destinations and offer high capital appreciation over a period of time or at the time of selling it. Owning luxury second home properties enhances social status and prestige within the community and among the Indian Diaspora. Most of such luxury second homes are located in coastal areas or hilly terrain but yet close to metro cities. These locations have excellent connectivity to the city with good social infrastructure in place.
The NRI segment of buyers is expanding, with NRI sales doubling in the last two years. NRIs are attracted to the affordable property prices in India compared to other countries. According to a report by a realty firm, NRIs invested $13.1 billion in the Indian real estate market in FY21, and the inflow is likely to have grown 12% to reach $14.9 billion in FY22. In FY21, average ticket size of purchase from UAE-based NRIs has grown by 11.5% to reach $97,000.
As per NoBroker.com, Indian residential real estate has witnessed a 35% growth year-on-year through the investment from NRIs. This burgeoning trend is especially evident in their preference for gated communities, which offer a host of amenities. Gated communities are a hot favourite amongst not only NRIs but the affluent Indian residents as well.
A study conducted by the NRI-focused fintech platform SBNRI revealed that approximately 53% of surveyed NRI investors asserted that India delivers superior investment returns compared to other countries where they have invested.
The Indian government has also introduced several initiatives to encourage NRI investments, such as allowing repatriation of sale proceeds, tax benefits, and simplified property acquisition processes. Also, NRIs have an emotional connect with their home country and these investments further build and maintain these strong ties with their country and family back home. Finally, Indian real estate becomes a crucial component of retirement planning for NRIs, offering a sense of security and a potential residence for their post-retirement years in their homeland.
The recently concluded Gulf News India Property Show brought together over 40 developers from India’s residential and commercial real estate sector, financial institutions, along with potential buyers.
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