With the continuously depreciating value of the Indian Rupee against the US Dollar, the real estate sector in the country has been experiencing a dynamic change. The drop has created a window for non-resident Indians to invest in the property market. Curious to know what’s driving this surge? Why is Indian real estate attracting more and more NRIs? Well, the answer lies in two big reasons – better returns on investments and an easy investment process.
Ever since the industry recovered from the COVID-induced lockdowns, it has emerged as one of the most lucrative investment options in India with potential capital appreciation. With the emergence of proptech phenomenon and adoption of latest technology in the industry, NRIs can now conveniently explore, evaluate, and invest in properties from anywhere at any time, reducing the complexities and uncertainties traditionally associated with NRI investments in India.
In this tech-savvy generation, all the information needed to determine the best projects to invest in, including pros and cons, city-specific patterns of capital appreciation, and developing locations, is now available at your fingertips. And investing in real estate remotely is no longer a frightening endeavor.
Why NRIs Are Increasingly Investing in Indian Property Market?
For Non-Resident Indians, investing in residential properties across major Indian cities holds financial as well as emotional significance. NRIs have a deep emotional attachment to their roots in their native place, which frequently drives their interest in investing in the Indian property market. Furthermore, real estate is a tangible asset that gives a sense of security and stability, making it an appealing investment option for foreigners.
Besides the emotional aspect, NRIs generally invest in properties in India due to long-term capital gains. The rental return, which was usually between 2& and 3%, has risen to 3%-5% in the post-COVID era, making real estate an attractive investment option. The last two years have seen excellent capital appreciation across metros, which has fueled investors’ interest in buying luxurious residential properties in the country.
NRIs are increasingly looking for ready-to-move-in apartments with luxurious interiors and projects nearing completion. Ticket sizes are typically above INR 80 lakh, with a specific preference for gated communities for hassle-free tech-enabled management.
Other Investment Options in India
Apart from real estate, there are several other appealing investment choices in India for NRIs and expats where they can diversify their portfolio easily.
- Mutual Funds
Mutual funds are considered as an ideal option for NRIs seeking diversified exposure to Indian stocks and debt markets without having to manage their investments actively. Several asset management companies (AMCs) provide tailor-made plans to non-resident indians. This includes equity funds, debt funds, hybrid funds, sector-specific funds, etc.
- Direct Equity
Investing directly in the Indian stock market can prove to be profitable for NRIs who are willing to take on risk and are interested in volatile market conditions . NRIs can buy shares in publicly listed companies via a Portfolio Investment Scheme (PIS) account. Over the years, India’s economic narrative and stock market success have drawn significant NRI investments.
- Government Bonds and Securities
The Reserve Bank of India (RBI) issues a variety of government bonds, including the Bharat Bond ETF and sovereign gold bonds (SGBs). These are low-risk investments that provide reasonable returns and are appropriate for cautious investors.
- ETFs
Exchange-Traded Funds provide NRIs with an efficient option to invest in a portfolio of assets, offering diversity just like mutual funds but with the tradability of equities. They are available for a variety of indices, industries, and commodities, allowing NRIs to align their investments with specific market areas.
The Road Ahead
Looking forward, the influence of NRIs on the Indian real estate sector is expected to grow even more. India’s rapid urbanization rate, coupled with infrastructure development, is likely to drive property appreciation, attracting several foreign investors. With digitization, government reforms, and a strong economy, India offers international investors a robust market for both residential and commercial investments.
