NRI investments hit their peak after the realty sector started recovering from the COVID-19 pandemic. However, taking all these trends into account, is it worth investing in the Indian market now as far as NRIs are concerned? Here’s finding out!
NRIs (non-resident Indians) have greatly contributed to overall recovery in the Indian real estate sector, snapping up properties in large numbers in the domestic market. Several major Indian cities and even Tier-2 cities saw NRI buyers picking up bigger properties in the luxury, ultra-luxury and even mid-range segments, greatly enhancing sales figures and helping developers offload inventory. The preferences for NRIs were quite clear- spacious and bigger homes, ideally within gated townships, quality amenities especially those inclined towards health and wellness and reputed real estate developers with proven track records of completion.
That was then. In the current scenario, will Indian real estate investments pay off for NRIs? Will they be worth it? Experts seem to think so. Here are some reasons worth mentioning in this regard:
- Residential real estate is steadily picking up in India with handsome increases in sales figures and a drop in unsold inventory. New launches are anticipated to rise even further in the coming days.
- Sales growth over the last year has shown the resilience of India’s realty sector.
- RERA and other market reforms have made the sector highly transparent for NRI investors. At the same time, they have led to higher market share being occupied by organized and reputed developers. Smaller and unorganized players have either moved out of the market or consolidated with bigger counterparts through joint ventures and the like. This is a positive development since NRIs prefer dealing with reputed real estate brands and developers for their investments.
- NRIs should keep investing in Indian real estate due to the falling value of the Indian rupee against the dollar or other foreign currencies. NRIs will naturally get more advantages if they cash in on a depreciating rupee, enhancing their overall affordability greatly. Purchasing power is at an all-time high for NRIs, and they should tap into this situation.
- Property and land prices are still stable in the Indian market with nominal increases expected in 2022. Hence, NRIs may purchase larger spaces at comparatively lower prices in the current scenario. In the future, when demand picks up and prices start rising swiftly, they will gain handsomely from their investments.
- NRIs should also note that other market instruments are seeing lower interest rates, especially FDs, equities and even gold. Hence, investing in real estate is a better way to earn higher returns and beat inflation in the long run.
- Taxation aspects are simpler now in India, especially with the introduction of GST. NRIs will have indexation benefits for properties that are held in the country. Immovable units which are more than 24 months old will be taken as long-term capital assets with taxation rates of 20%. NRIs may also be eligible for tax deductions under Sections 80TTA and 80C of the Income Tax Act in some cases.
- NRIs can easily transfer funds into their NRO accounts and pay property sellers likewise. They can directly transfer funds to the accounts of sellers as well.
Some NRI Buying Trends
As per several reports, a higher percentage of NRIs are looking for properties in India for self-occupation or end-use, a trend that is markedly different from earlier years when they would mostly invest for earning returns. A survey had more than 50% of NRIs affirming their desire to purchase real estate in India over the next few months for self-occupation while the remainder talked about investing to earn higher returns. This clearly demonstrates growing NRI confidence in the potential and future growth of the Indian real estate market.
Many NRIs are also thinking about coming back to India or taking up permanently remote working positions on account of various uncertainties arising from the global pandemic. Many NRIs are viewing options in the major 7-8 cities of India although they are open to investing in smaller towns and cities in order to stay near their family members. Here are some other factors worth noting:
- The highest demand was observed for luxury real estate properties with cutting-edge facilities.
- More than half of NRI buyers are choosing luxury units that are priced at less than Rs. 1.5 crore.
- Many are also going for units priced between Rs. 90 lakh and Rs. 1.5 crore.
- A smaller proportion is investing in homes priced between Rs. 45 lakh and Rs. 90 lakh.
Considering these market trends, it can be said that NRIs are sizably confident about the future prospects of the Indian real estate market. In the current scenario, it makes sense to invest in the market back home on account of currency advantages, stable property prices, transparency in the sector, multiple options and of course, record-low rates of interest on home loans. With the market picking up, NRIs will get better returns on their investments in the future.
