The Indian real estate industry in the past two years has endured a pandemic and still survived the brunt. Although the pandemic’s arrival shook the industry’s future, the opposite transpired as strong real estate sales were reported. The epidemic affected the outlook of prospective homebuyers and their needs attached to the property. Following this, the demand increase was aided by the decrease in stamp duty and the retention of left circle rates, which suddenly caused the NRI community’s interest in this sector to increase. With these data in place, reports have predicted a rise in NRI real estate of 14.9 billion dollars during India’s financial year 2022.
Thus, the Indian real estate market will eventually prove to be a lucrative investment option for the NRI community for the following reasons –
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Residential Indian Real Estate – The Main Asset Type for NRIs
Indian real estate has invariably been the favoured investment choice for NRIs due to the upper hand on the international currency. The residential real estate market in India received up to $13.1 billion in remittances from over 32 million NRIs in 2021, and this amount is anticipated to increase by 12% in 2022. Mumbai and Gurgaon are leading markets that have drawn the lion’s share of these numbers. Golf Course Extension Road and Sohna Road in Gurgaon have been popular among NRI real estate investors due to the increased supply-demand of newly launched properties.
Rupee Value Drops
Since 2022, the rupee value has decreased relative to the USD, dropping from Rs. 74.40 to a new low of Rs. 82.12. The current economic downturn has made purchases in all sectors more expensive for Indians. On the other hand, NRIs have an advantage, particularly those who reside in nations with higher currencies. The stronger currency multiplies more quickly after conversion, resulting in better NRI real estate deals.
In part due to a weakening currency, real estate companies in India have resumed pushing upscale residences to investors and purchasers in the US, UAE, UK, and South-East Asia.
Rise in Interest Rates Worldwide Affecting Prices in Housing Markets in India
To curb inflation, central banks worldwide have begun raising interest rates. The housing markets in the US and China have been most affected by the increase in house prices. On the other hand, buyers looking for a property or homeowners looking to enhance their homes by searching for a comfortable locality account for a big portion of the investments made in the Indian real estate market. As a result, the pressure on house prices in India has been minimal to nonexistent. In certain regions of India, house prices have begun to stabilise.
see also – Property in India after Lockdown: Indian Real Estate
Increase in Demand for Upscale Residential Properties in India
To fit their opulent lifestyle, NRIs have traditionally preferred to invest in the luxury home segment. Another factor contributing to India’s increasing demand for luxury and upscale Indian real estate market is the country’s rising income levels.
Investing in the luxury Indian real estate market should offer a better growth rate than the developing market sector. In addition, due to the great demand for these residences among the wealthy, investing in luxury Indian real estate will result in higher rental yields as well.
Recent data indicates how over the past two years, in the top seven cities, average monthly rents in the upscale micro-markets have climbed by 8 to18%. Worli in Mumbai witnessed the maximum rental growth of 18% throughout the term, with luxury home rent increasing from Rs. 2 lakh per month in 2020 to Rs. 2.35 lakh in 2022. In the same time frame, Rajaji Nagar in Bengaluru had a 16% increase, going from Rs. 56,000 in 2020 to Rs. 65,000 in 2022. Moreover, during the past two years, capital growth in these upscale housing markets has remained low, around 2 to 9%. The capital appreciation rate in Rajaji Nagar, Bengaluru, was the highest at 9%, with average prices starting from Rs. 5,698 to 6,200 per square foot.
Investor-Friendly Measures to Encourage NRI Real Estate Investment in India
The Indian real estate market has endured a significant transition over the last 5–6 years as it moves closer to being a consumer market. The market has grown to be more open, reliable, and lucrative as a result of the implementation of measures and legislative initiatives like RERA and payment regulation.
Conclusion
Owing to its increase in demand, the luxury residential market is thriving in 2022 among the NRI real estate sector. In micro-markets such as Mumbai, Gurgaon, and Bangalore, real estate companies in India are focusing their attention on upscale residential properties to showcase a profitable and attractive market.
