The NRIs or the Non Residential Indians, have always been eager to invest in real estate in India. The market dynamics keep on changing but it is not entirely impossible to keep a track on it. It has been seen the NRIs are investing more and more in commercial realty in the last couple of years. The investment in residential units was always there- some just for income generation, while some really wanted to come back to their home country at a later stage. However, the investment in commercial realty in large numbers had started just about a couple of years back. That is because, the Indian commercial real estate had gone through a fresh period of growth, which has been backed by very strong economic fundamentals. The rising urbanization and the growth of infrastructure are added advantages.
What are the factors working in favor of commercial properties?
The FDI route had also been opened and so more and more retail brands are entering the Indian market. These factors are definitely favoring the NRIs. It must also be added that the depreciating rupee value would increase the NRIs investment in the sector. With the introduction of the RERA, more transparency and accountability has been brought in this sector. It has been seen that the rental payments are also high- almost thrice the amount that one gets from residential units. The capital appreciation is also better and has better chances of improving. This is one of the major reasons why the NRI investors are looking for opportunities in India.
In addition, there is also the concern of maintaining the property. It is very hard to get someone to look after an empty residential property- there could be times when there are no tenants. However, in case of a commercial building, the maintenance is mostly carried on by the building staff. It is also far more organized and timely and is carried out by professionals. The post sales looking- after is rendered much easier. So basically, the entire process is quite hassle free and once the lease has been granted to the other party, who are using the premises for retail, the income is continuous, large and without any problems as far as maintenance is concerned.
How are the NRIs being benefited?
The loan facilities available to the NRIs are an added reason why they find it easier to invest here. Not only can the NRIs can avail loans for property purchase in India, but they can also claim tax benefits under Section 24 and Section 80C of the Income Tax Act. Bank funding is a smart way to get the title papers and link documents all evaluated by the bank. The process is seamless, and with big developer names making sprawling malls and shopping complexes, it is also easier and more transparent to work, with hardly any scope of falling prey to fraudulent activities. All of this has led to the reduction of vacancy for commercial spaces by almost 50%.
Some of the cities that has been witnessing this investment by NRIs are Bangalore, Mumbai, Pune, Hyderabad, Delhi, Chennai and a few more. The sprawling entertainment zones, malls, Grade A office spaces are top spaces for the NRIs to invest in. In NCR, Gurugram has emerged as a winner, with many spaces that are very attractive to the end user.
Another advantage here is that once a commercial property has been rented out, the arrangement is more or less a long term one and that leaves the NRI feeling settled and stable with the income generated from it. In case of residential investments, that is not often the case as the families tend to move. In that case, the premises are left empty and one often has to start the process of finding new tenants. All of this have significantly increased the importance of commercial real estate in the cities of India and the trend is not going to stop anytime soon.
