Here’s why NRIs are investing in Indian real estate

by Neha Garg Real State Consultant

An interesting trend in the property market reveals that NRIs are investing in Indian real estate consistently over the last few years. Besides, the last decade has witnessed the property market expand tremendously. NRIs are keen to explore the potential in the market and are investing in homes. Now that the work environment is more hybrid across the countries, NRIs are interested to get back to their home country and enjoy a higher standard of living. A number of factors drive NRIs to invest in properties in India.

Key reasons why NRIs are making property investments in India

NRIs making property investments in India lead to the strengthening of the country’s economy. Besides, it leads to the inflow of foreign funds to the country. Thanks to favorable government regulations, NRIs can now readily indulge in property purchases in the Indian real estate sector. Let’s take a look at the key reasons that are prompting these people to invest in the property market in India.

1. Value of the Indian currency

The strengthening of the dollar against the rupee makes it favorable for NRIs to invest in the Indian real estate sector. Besides, the demand for homes in this community has increased significantly with the fall of the rupee. In 2019 and 2020, the rupee dropped by 2% against the dollar. In 2021, it further witnessed a 1.5% drop. In recent years, the rupee has dropped to an all-time low.

Due to trade deficits, the rupee has been under pressure for quite some time. Besides, it has suffered due to the rising interest rates in the US and fears of a global recession. NRIs can take advantage of the decline of the rupee and capitalize on stronger currencies while purchasing homes in India.

2. A home back in their country

NRIs are keen to purchase second homes back in their country. Apart from enjoying the company of their friends and family members back at home, they fancy a second source of income. Given that rental income constitutes a reliable source of found, they are also buying weekend houses. After years of working abroad, NRIs seek the comfort of their homeland and purchase these properties.

3. Strong returns

NRI investment in India real estate has been gaining traction due to the strong returns that they expect from these properties. For NRIs, the real estate market in India looks lucrative. Over the years, they can benefit from higher returns and eventually diversify their portfolio. Particularly, NRIs are investing in cities like Gurgaon, Noida, the NCR, Hyderabad, and Bengaluru. Most of these NRIs are currently settled in the US, Canada, Europe, the Middle East, and other countries in Asia.

Besides, they have shown interest in purchasing properties in Tier 2 cities. The pandemic has significantly altered the dynamics of families residing in India. Therefore, many people now prefer living with their grandparents and parents. This has also strengthened extended families.

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4. Easy buying process

Over the last few years, the government has taken several measures to streamline the process of NRI investments in properties. Therefore, investing in Indian real estate isn’t complicated for NRIs. Along with better regulations, the government has focussed on developing infrastructure in the two and one-tier cities.

So, there are both internal and external factors that have driven NRIs to invest in the realty sector in India. Simpler tax norms and less rigid formalities continue to prompt investors to count on the real estate sector in India. Besides, the RERA Act has made property transactions simpler.

5. High resale value

NRIs prefer property investments rather than other asset types such as gold or shares. Considering the economic and political unrest around the world, they consider real estate as the safest asset class. Real estate prices remain stable and don’t fluctuate like stocks or shares.

Besides, debt securities have consistently underperformed over the years. The commodity market also doesn’t look too good for consistent returns. On the other hand, the resale value of properties in prime locations in India is high. This can generate positive returns to NRIs over a long period.

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6. Better transparency

Reforms made by the government such as the RERA Act have reinforced trust in the investors. They are now more confident in purchasing properties without running into legal hassles with the developers. In the past, the property market in India was difficult for NRIs to navigate through. Now that there is a transparent transactional mechanism in place, NRIs are getting back to the property market. Making a property investment in India won’t leave them duped due to the strong vigilance of the RERA.

All these factors have contributed to the popularity of the Indian real estate sector among NRIs. This trend will significantly strengthen the sector in the coming years.