2018 paved the way for a slew of reforms that have bolstered the Indian real estate sector into becoming an investment ground of choice among Non-Resident Indians (NRIs).
The past year has galvanised a resurgence for the Indian real estate sector, making it an attractive investment avenue for NRIs. Thanks to a series of key policy reforms, the sector has acquired an augmented accountability for processes, function and delivery. In addition, factors like depreciation of the rupee, demonetisation-linked price revisions and policy upheavals have kindled a culture of transparency and increased consolidation.
Real Estate: The NRI Magnet
Real estate is a unique asset class, because it is overarched by a patriotic sentiment that often supersedes financial consciousness. 78% of NRIs opt to channel their funds into real estate rather than mutual funds, stocks, fixed deposits and other asset classes, simply for the honour of owning a property in their motherland. With a consistently depreciating rupee, the cost of property acquisition for NRIs has declined, presenting the perfect opportunity for savvy investors to park their funds in lucrative properties. The real estate market shows a clear inclination among NRIs to invest in commercial and luxury residential properties, in view of the superior rental yields and expected currency appreciation. However, there is also an anticipation that young NRI investors will incline themselves towards affordable housing, given the lower price point, higher return on investment and ease of virtual maintenance.
Past Hindrances & Future Opportunities
In the past, property considerations among NRIs have been marred by myriad concerns such as inadequate transparency, delivery delays, and spurious developer intent. However, the introduction of RERA has served to overcome these challenges and regain the trust, interest and confidence of NRI investors. Despite the slew of real estate reforms, NRIs are still cautious about where they channel their funds, favouring completed projects and under-construction properties by renowned developers with sound financial backing and a delivery track record.
Sentiments In 2019
2018 was a lukewarm year for the Indian realty sector, with events like the rupee depreciation, changes in the Credit-Linked Subsidy Scheme and the liquidity crunch among Non Banking Financial Companies (NBFCs) affecting developer sentiments and consequently curbing new launches. Despite the setbacks, however, the year saw a rise in property sales, a promising trend that has provided a fillip to buyers, both in India and overseas.
In 2019, the affordable housing segment is likely to attract maximum eyeballs among NRIs. RERA and GST reforms have given a booster shot to property developers, resulting in a surge of ready-to-move-in constructions. In due course, under-construction projects are expected to see similar traction, making the Indian real estate sector a coveted investment zone for NRIs.