The Indian real estate segment has started rolling back on its track after a prolonged stagnancy brought forth by the COVID-19 pandemic. The lucrative investment option has no longer remained complicated for foreign investors and NRIs looking to own a chunk of land in their home country, a report by SBNRI in March had stated.
The Indian real estate segment demonstrates an upward trajectory with the projection to exhibit a growth rate of 9.2% CAGR during 2023-2028, the report had added.
The survey revealed, around 52% of NRIs consider investing in Commercial Real Estate (CRE) to diversify their portfolio in the Indian real estate segment. This exhibits CRE as one of the most preferred asset classes for NRIs over others like the residential segment.
Is real estate a worth option for NRIs when the market is still not recovered well post pandemic?
Sankey Prasad, CMD, Colliers India said that it is true that the Indian real estate market is still recovering from the effects of pandemic, but there are strong signs of improvement which is motivating the NRIs to invest in the sector.
“In Q1 2023, the residential real estate market saw robust uptick in sales, driven by a number of factors, including the continued economic growth in India, the rising disposable incomes of Indians, and the government’s focus on infrastructure development. Similarly, the commercial real estate market saw a healthy increase in leasing activity driven by the increasing demand for office space, retail space, and warehousing space,” Prasad said.
NRIs are well-positioned to benefit from this growth of the Indian real estate market. They have access to foreign currency, which can be used to purchase property in India at a lower cost than locals. Additionally, NRIs are not subject to the same taxes as locals, which can save them money in the long run, Prasad added.
Why NRIs will invest in micro markets and smaller cities when infrastructure is a problem in many small cities?
Prasad feels despite the challenges posed by less developed infrastructure in micro markets and smaller cities, NRIs are increasingly drawn towards real estate investment in these (micro markets and smaller cities) areas.
Their motivations stem from several factors. Firstly, these markets often offer more affordable property prices compared to major metropolitan areas, enabling NRIs to diversify their investment portfolios and potentially reap long-term gains.
Secondly, they view such investments as an opportunity for future development and growth, as these regions may witness infrastructure improvements over time. Additionally, NRIs may have sentimental or cultural connections to these smaller cities, making real estate investments a means of preserving their heritage and creating a tangible connection to their roots.
Cities to see the impact of NRI investments
According to Prasad, even though the list can be exhaustive as the growth momentum is really impressive in a lot of emerging markets, Chandigarh and Coimbatore are emerging as two strong contenders.
Chandigarh, renowned for its planned urban development and modern infrastructure, attracts NRIs seeking a cosmopolitan lifestyle, excellent education, and healthcare facilities.
Coimbatore, on the other hand, is emerging as a manufacturing and IT hub, offering investment opportunities and a high quality of life. These cities’ growing economies, affordable property prices, and government initiatives promoting ease of doing business make them attractive to NRIs.
With their potential for long-term capital appreciation and favourable investment climate, Chandigarh and Coimbatore are set to witness maximum NRI investments in real estate.
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