- Indian expatriates from : UAE, Qatar, Saudi Arabia, Kuwait & Oman are those NRIs who seem to be keen on making investments into commercial property in India .
- The 4 metros : Delhi-NCR, Mumbai, Bengaluru and Chennai in addition to Pune and Hyderabad are currently seeking attraction for the lion's share of NRI investments.
- Irrespective of the given fact that Equities tend to score higher than real estate on capital appreciation.
Foreign investments in the Indian commercial property segment are all set to scale new heights. What majority contributes to it is the new enhanced government policies and convalescing transparency with economic reforms.
Very soon the Indian commercial real estate property is bound to see increasing investment infusions from their Non-Resident Indians (NRIs).
To make this possible Indian law has started permitting 100% FDI (foreign direct investment) in construction development. Also, REITs are now in place for commercial real estate.
Sources from a World Bank report revealed that India was in receipt of 79 billion USD by way of remittances in 2018. A substantial part of this amount was witnessed making its way into real estate.
Let us quickly figure out the main features that happen to make these cities top picks:
- The increasing rise of bright employment opportunities due to their growing economic environment
- Doing business is no more a hassle.
- Infrastructure being given a face-lift which in turn escalated their living ability quotient.
- Making air connectivity affordable and convenient with world cities along with healthier intra-city connectivity by way of escalated highway construction
- Markets like Noida and Greater Noida are gaining increasing levels of capital inflows from the NRI buyers.
Thanks to superior infrastructure, Metro Rail connectivity, and proposed international airport.
UAE: the chief NRI market :
It has been observed that the largest concentration of Indian population outside India is located in UAE. The UAE accounts for nearly 3.3 million Indian population. The NRI segment of Dubai is predominantly a huge customer base for Indian real estate. That's why NRI Investors boost investments in Commercial Property in India.
According to the Reserve Bank of India, 26.9% of inward remittances were accounted for in the UAE in 2018. The bank further added that it is the current decline in value of the rupee against the dirham that has heightened remittances and made the possibility of Indian real estate investments even more lucrative for NRIs.
NRIs by and large prefer to make Investments In India :
NRIs mainly prefer to invest in properties located in and around their home state or city. The reason is they are more familiar with the territory and also have either family or friends to look after the management and renting aspects. However, there are some investors who do foray into other cities as well.
As a practice NRIs were mostly found making investments in high-end luxury properties as these properties tend to offer them the same international lifestyle that they are accustomed to. Luxury properties generating a substantial rental income was an additional advantage.
With the passage of time, NRI Investors boost investments in Commercial Property in India moving their interest to affordable and mid-segment housing. It is the Indian Government that pulls them towards this investment by offering considerable incentives to buyers of such housing. As these types of properties are in huge demand they, therefore, deliver a higher rental yield in addition to a better long-term appreciation.
Away from dubious developers, NRIs now prefer to park their investment only with builders who are reliable and organized. They only opt for the projects that are registered under the Real Estate Regulation and Development Act (RERA) that pursue transparent business practices.
Real Estate versus other modes of investment :
NRIs have the liberty to pick and choose from a variety of asset classes when it comes to investment. Over the last 5 years, the equity market has drawn a considerable interest of 12-15% as they have performed consistently with a CAGR (Compound Annual Growth Rate). CAGR growth of 2-3% has been seen with real estate investments in Delhi, Mumbai, and Bengaluru during the same period.
Equities do score higher than real estate in terms of capital appreciation but they do not share some of the additional benefits of real estate. A real estate investment comes with the additional benefit of rental yield that carries a relatively lower risk and comes with considerable tax benefits.
Real estate investments are relatively stable than equity markets that fluctuate very heavily. The intrinsic value of an investment in real estate is largely stable and tangible, while equity investments do not have any intrinsic value and there can be a substantial loss of capital in case of indices going down.
This is why NRI Investors boost investments in Commercial Property in India, not in other means. Even if there are less to moderate returns in the immediate term, there are brighter chances of wealth creation in the long term.
The Future of the Real Estate Sector in India :
The regulatory environment for the real estate sector in India has improved by several folds. Goods and Services Tax (GST) and RERA implemented by the government have given the Indian residential real estate industry an aura of transparency and accountability to strengthen the NRI Investors boosts investments in Commercial Property in India as interest.
Developers are always attuned to this high-potential clientele. They extend attractive offers to NRI buyers and also leverage technology like Augmented Reality (AR) and Virtual Reality (VR) to reach their expatriate audience across the globe.
NRI investors are seen turning their attention to the commercial property sector in India. This asset class is very close to the heart of every Indian in spite of where they live and work across the globe.