NRIs are likely to invest 12% in the Indian real estate sector by 2023 and have already invested $15 billion in 2022. Currently, the market size of Indian Real Estate which is US $200 billion is anticipated to rise to US $1 trillion by 2025 and is likely to be 13% of the country’s GDP, according to a news report.
NRIs or Non-Resident Indians have several reasons to invest in the Indian real estate market. Here are some concrete reasons with relevant statistics and resources to back them up:
- Indian Currency Value
Non-residents of India find investment in the real estate a good alternative to add value to their money over upcoming years. Additionally, this option protects their money against ups and downs in currency. The recent fall in the currency rate has upped the demand for homes. If you monitor the value of Indian rupee, it has been consistently scrolling down from 8.6 percent in 2018 to 1.5 percent in 2021. Even, this year also witnessed an all-time low of Indian currency rate from INR 74.40 to INR 81.88.
The reason of this downfall is a growing trade deficit and hiking petroleum prices. Moreover, the US interest rates are also increasing. Globally also, the recession is on the rise.
This much decline in Indian currency rate has brought NRIs to the profitable side because they need to spend less to purchase a house.
For NRIs, investing in Indian real estate is a million dollars deal. This is simply because it helps them increase their financial results and also, add a diversity to their portfolio. Mostly, this emigrants’ community from the US, Canada, the Middle East, Europe, and other Asian countries is fond of investing in cities like Gurgaon, Bengaluru, and Hyderabad.
Additionally, these emigrants also show their likelihood to purchase sizable homes in their own hometowns. This practice has seen improving in Tier 2 cities. Since the outbreak of the pandemic, Indian families are in the need of living together with their parents and grandparents.
- High Return on Investment
The Indian real estate market has been one of the best-performing asset classes in the last few years, providing high returns on investment. The growth rate of Indian economy is steadily robust, and hence, projected to be 6.9 percent of the full year and its real GDP is 7.7 percent that is going up year-on-year during the first three quarters of the fiscal year 2022-23, as per a report.
Also, a minimum of 6% to 8% increment in property prices across south Indian markets is likely to result in higher land value and cost of raw materials used in construction.
- Stable and Growing Economy
India’s economy has been growing at a steady pace, making it an attractive destination for investment. The country’s GDP is expected to skyrocket at a rate of 10.5% in the fiscal year 2021-22, according to the International Monetary Fund (IMF).
- Affordable Prices
The Indian real estate market offers affordable prices compared to other countries, making it an attractive investment destination for NRIs. According to a report by JLL India, the average residential prices in India are 4.4 times lower than in Hong Kong, 3.7 times lower than in London, and 3.3 times lower than in Singapore.
The residential apartment market in India registered record the sale of property, which is close to 52,000 units in Q1 2022. It marks an increase of 11% on a sequential basis. Sales for the quarter exceeded the average quarterly sales by a significant 148%.
- Increasing Demand for Housing
With a growing population and urbanization, the demand for housing in India is increasing rapidly. According to a report by KPMG, the Indian real estate sector is expected to reach a market size of US$1 trillion by 2030, driven by demand from the affordable housing segment.
- Favorable Government Policies
The Indian government has introduced several policies and initiatives to boost the real estate sector, including the Pradhan Mantri Awas Yojana (PMAY) scheme, which aims to provide affordable housing to all by 2022.
- Simplified Buying Process
India also has tiered cities, wherein the government infrastructure expenditure is recorded way better in tier-one cities because of their best connections. On the other hand, the condition of Tier-two and Tier-three cities is weak because of weaker connections.
Indian cities in Tier-two have more communication facilities, which attract businesses and enterprises there. Another reason for this engagement is a significant infrastructure growth there. In all, these cities have been much improved in terms of digital and inter-cities connection. The broadband speed is continuously growing, whereas the prices of mobile data have come down. It means that the availability of data in these cities is smooth and affordable.
- Trustworthy & Transparent Deals
The reforms, such as the RERA Act (Real estate regulatory authority) have attracted NRIs to invest, are initiated by the government. So, non-residents have shown their trust in its transactions. This type of reforms has increased the confidence in our non-resident community, which helped in addressing the issue of distrust.
RERA has actually made it easier and hassle-free for them to buy or sell homes. It has eliminated the chances of being tricked or cheated. There is no hidden cost associated with any transactions, which shows higher transparency for both, buyers and sellers.
- High Resale Value
The intention of NRIs is very clear in regard to this investment option. They prefer it as an investment for getting a higher rate of returns, as mentioned above.
Where the debt securities or the price of gold is underperforming in a global market, real-estate performs better. However, stock market or mutual fund investment is also a good option, but it takes multiple unpredictably large swings. What it all means is that real-estate offers a secure investment option with all positive sides over other investment options for NRIs.
- Tax Benefits
Tax benefits such as deduction of interest on home loans and exemption from capital gains tax on the sale of property if invested in another property.
