Construction Industry News
The Indian real estate market has consistently turned to non-resident Indians (NRIs) as a preferred investment option. There has been a notable trend in recent times of NRIs increasingly directing their investments towards luxury real estate in India. 2022 reports show that NRIs have invested a record $13.1 billion in the Indian real estate market, and this figure is expected to increase further in 2023. A prominent report highlights that the contribution of NRIs to the market Indian real estate has doubled. Notably, almost 20 per cent of many real estate developers income now comes from international sources, unlike the pre-pandemic scenario when the NRIs share of income was less than 10 per cent.
The increasing investments of NRIs in the Indian real estate market can be attributed to several factors. First, a sense of familiarity and connection with their home country motivates many NRIs to invest, allowing them to maintain ties while benefiting from Indias economic growth. Secondly, the stability and tangibility of real estate make it an attractive asset class for diversification, reducing risk by spreading investments across different areas. Additionally, the prospect of real estate value appreciation over time attracts NRIs seeking significant returns on their investments.
In Indias urbanized landscape, rental income opportunities are providing a steady stream of income, with rental yields increasing from 2-3% to 3-5%, making real estate an option. favorable investment. The investments are mainly tilted towards gated communities for simplified and technology-based management, with the ticket sizes mostly exceeding Rs 75 lakh.
Currency fluctuations favor NRIs as appreciation of the Indian rupee after conversion can increase the value of their investments. Relaxed regulations, favorable government policies and the emotional value of owning a tangible asset in your home country contribute to the investment decisions of NRIs. Cities like Mumbai, Delhi NCR, Bengaluru, Hyderabad and Pune, along with second-tier cities like Ahmedabad, Chandigarh and Kochi, are attracting NRI investments in luxury real estate, a trend that will continue. Pune, billed as the Oxford of the East, is emerging as a major NRI real estate destination. With a thriving IT sector, strategic connectivity, quality infrastructure, renowned educational institutions and a harmonious cultural mix, Pune offers an attractive lifestyle. Enriched by its heritage and lush surroundings, Punes Grade A developers ensure modern comfort and security, making it an attractive option for NRI real estate investments.
To facilitate NRI real estate investments, the Indian government has relaxed FDI norms, introduced a special visa for NRI investors and established a single-window approval system. As per Foreign Exchange Management Act (FEMA) guidelines, NRIs can invest in both residential and commercial real estate under certain conditions. Rental income from property is taxable in India. NRIs considering real estate investments in India should consult financial advisors to understand the tax implications and associated risks.
The growing NRI interest in luxury real estate in India bodes well for the Indian economy. It underlines the confidence of NRIs in the Indian economy and their willingness to invest in the country, thereby contributing to economic growth and job creation. Furthermore, this investment improves the quality of life of Indians as NRIs invest in luxury properties that offer world-class amenities. Overall, the upward trajectory of NRI attraction to luxury real estate in India has positive implications for the economy, the people and the NRI investors themselves.
