Are NRIs the new leg of investors in real estate in India?

A steady strengthening of the dollar against the rupee over the years; more categories now to invest in and with Government of India’s ‘Make In India’ initiative which calls for greater indigenisation of industries, the real estate market has paved the way for Non-Resident Indian (NRI) investors.

Talking of the first nuance, the dollar rose from Rs 59 in 2014 to Rs 71.60 in November 2019. Also, the future looks promising as financial indices point towards an even stronger dollar in the next six months with an exchange rate expected to touch somewhere around Rs 75. Hence, comes the implication that NRIs can invest more in the Indian real estate market in time to come.

By 2022, NRI investments in the country’s real estate are expected to be 30-35 percent of their total remittances. According to the World Bank report in 2018, India reported $80 billion in remittances, which had $13 billion investments in the real estate sector.

This scenario is shouldered by the fact that India's real estate looks alluring for Indians as well as NRI investors as the residential, commercial, and institutional market is expected to grow in the coming years. As the standard of living is improving, the prevalent need for malls, complexes, cinema halls, commercial buildings, office co-working spaces, and office spaces is increasing simultaneously. Since past years, NRIs have invested in residential projects majorly, but now with changing trends, options have open for them in other sectors too.

One another thing that gives NRIs motivation to enter the Indian market is the fact that now the government has brought transparency in the sector with a new set of laws and legislation with The Real Estate (Regulation & Development) Act of 2016 [popularly known as RERA] and Good and Income Tax (GST). This act not only promises transparency but also ensures the security of investors. With this act, each project of residential, commercial, and institutional needs to be registered with the government first. Further, a fixed timeline of delivery is set, failing which the developer is liable to punishments. This was unlike yesteryears when the Indian real estate market was considered a sloppy investment as no clarity and transparency were maintained and putting money in real estate was seen as a risky thing.

Other than these reasons, there are two more reasons that make it a perfect fit for anyone and NRIs to invest in the Indian real estate sector. Since the last few years, the property rate has been down by almost 10-15 percent in many cities, which includes that of Mumbai. Secondly, the clearly depreciated Rupee has boosted their buying capacity and capability which promises additional 10-15 percent profits. These bonuses definitely give them an average edge of 25 percent on bookings, i.e., right at the onset of their entry into the market.

For NRI, home is where the heart and roots are. For them, their country is the utopian world that calls them and hence they always nurse a dream of returning to their homelands someday. Country alludes to many things for them, it's a nest of their parent's care, love, comfort, security, and belongingness. Hence, with transparent laws and better investment options available in the real estates of India spread across many cities of the country, they can plan their investments right.