Is it the right time for NRIs to buy property in India?
While 2018 has been a bumpier ride for the Indian real estate sector, it definitely has become the right time for NRIs to park their money in the sector. Post implementation of key policy reforms, Indian realty sector has seen a gradual resurgence due to increase in accountability in the overall system.
Indian Realty has lured NRI investors due to the various factors favouring them such as depreciation of Indian currency, reduction in prices post demonetization alongside major policy reforms leading to more transparency and greater consolidation.
78% NRI respondents prefer real estate over other asset classes – such as mutual funds, stocks, FDs, among others — largely because of the pride of owning a property back in their country of origin. Adding to it, the INR value has been witnessing significant low against the value of US dollar. Thus, rupee depreciation makes the best excuse for NRIs to invest in Indian real estate, as the cost of acquisition of property becomes lesser for NRIs.
Owing to current market scenario, NRIs are inclining towards commercial properties and luxury residential segment considering good rental yields and capital appreciation.
Conversely, affordable housing is expected to draw interest of young NRI buyers as smaller ticket sizes offers better return on investment with lower investment bandwidth and easy maintenance.
The major concerns of NRIs have been the lack of transparency in transactions, delays in project delivery and intent of developer. However, it has majorly been addressed by the introduction of RERA, which has turned out to be the major reason of NRI buyers showing their interest back in the Indian Realty with revived confidence. The government’s initiative to lift the infrastructure development across the country at large has also encouraged NRIs to consider Indian realty market back as their most preferred investment option.
However, NRIs are cautious enough to invest either in ready-to-move-in projects or park their money in under construction properties offered by established developers with strong financial backgroundand sound track record in terms of project delivery.
In 2018, Indian Realty estate sector did not witness an increase in launches due to major events such as the NBFCs liquidity crunch, rupee depreciation to its record low, changes in the Credit-Linked Subsidy Scheme etc. However, developers recorded a higher sale of inventory in 2018 compared to 2017.
The year 2019 seems to be opportunistic for affordable and mid-income housing segment along with investments opportunities from NRI buyers at large. There has been an upsurge in ready to move in units owing to RERA and GST benefits. Under construction projects are expected to see a massive push too once the GST rates are reconsidered by Government which is expected soon.
Authored by Mr Parth Mehta, Managing Director of Paradigm Realty