A study by KPMG India and Google says that NRI buyers are making a beeline for their hometowns for buying property in India in 2018.
As many as 78% NRI homebuyers said this gives them confidence to return to India and stay with their family when they grow old. India is one of the fastest growing real estate markets globally with residential segment accounting for 80% of the overall market.
The preferred destinations for NRI investments are no longer limited to the metros. Top destinations include Kochi, Coimbatore, Bengaluru, Chennai, Ahmedabad, Hyderabad, Trivandrum, Chandigarh, Pune, and Mumbai. Smaller cities like Vadodara, Nashik, Noida, and Ghaziabad are also registering a rise in NRI investments. Increasing transparency due to RERA and other policy initiatives is prompting NRIs to invest in the real estate back home.
Property in India is affordable for NRIs because of currency advantage.
NRIs are a major source of international revenue for Indian players. Key countries from where NRI investments are pouring in are UAE (20%), the US (18%), Kingdom of Saudi Arabia (10%), Singapore (7%), the UK (7%), and Canada (6%).
The domestic real estate market offers superior long-term returns.
“Institution of RERA has made investment in residential property much safer, and the risks previously attached to home purchase have been moderated. Considering that many NRIs will return to India, owning a home in their respective cities is a very sound investment for the future,” Santhosh Kumar, vice-chairman of ANAROCK Property Consultants, said.
The Indian currency is down nearly 14% against the dollar since early 2018. The Rupee is trading near 74 against the US dollar since mid-October and is expected to go down further.
“Fluctuations in the value of the Rupee has made it advantageous for people earning in foreign currencies to buy property in Indian currency. Buying property in India has turned more attractive because NRI buyers get more square feet space for the same amount in foreign currency. For NRIs, the situation is a rerun of the scenario we saw in 2012,” Niranjan Hiranandani, national president of Naredco, said.
To buy a house worth Rs 50 lakh, the average investment by an NRI, living in UAE, will be about 2.50 lakh dirham, while for an NRI in the US it will be a little over $68,000, and an NRI from UK will pay around 51,000 pounds.
Developers say this is the right time for investment in the realty sector.
“It is a great time for NRIs to invest in the residential real estate as there has been a significant drop in property rates after demonetisation. Moreover, implementation of regulatory frameworks like GST and RERA have made the market more equitable. Real estate purchase has become simpler with accountability and transparency,” Harinder Dhillon, vice-president (sales) of a leading real estate company, said.