All About NRI Investments in Indian Real Estate
We have been going through challenging times lately, from dealing with extreme climate change to fighting against a life-threatening pandemic. Like other countries, India too had to bite the bullet, which brought the country’s economy to a halt. In the wake of the COVID-19, depreciating value of the Indian Rupee, and anticipated revision of property prices, NRI investments in Indian real estate are expected to see a rise post-pandemic.
As Indian real estate plays a crucial part in boosting the country’s economic growth, investing in properties is always considered a safe bet. Another reason for NRIs to invest in Indian real estate is that it is one of the most stable forms of investment. Moreover, India’s real estate graph shows a slow but steady growth due to the new RERA norms and weathering fierce policy changes. With the rupee weakening against the dollar, there has been a rise in extensive job cuts in Europe and the USA that increased the NRI investments in Indian real estate.
According to the recent Anarock report on NRI investments in Indian real estate; ‘’The rupees’ depreciation had been a factor of considerable interest for the NRIs considering Indian real estate as a sensible investment option during these volatile times.’’
We have chalked down the reasons for NRI investments in Indian real estate
- Real estate ensures a stable ROI (return on investment)
- The property ensures genuine appreciation value thus eliminating crisis.
- Real estate investment is often considered a risk-free option.
Real estate in India contributes almost 7% to the national GDP and the Government of India has introduced many housing schemes to meet the expectations of the home buyers. Additional benefits have been given to that housing development which falls under the category of Affordable Housing within the budget of 45 lakhs. The Gov. has not only brought down the GST rate to 1% for affordable homes but also reducing it to 5% for the other under-construction homes last year.
Factors that may contribute to the rise in NRI investments in Indian real estate
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Reduced repo rate
The repo rate is a rate at which the Reserve Bank of India (RBI) lends funds to other commercial banks. On that account, a reduction in the repo rate implies lower acquisition costs for the commercial banks and thereby reduced loans rates for their customers too.
From 5.75% in June 2019 to 4.40% in March 2020, the current repo rate in India is at the lowest ever.
According to Amit Goenka, Managing Director and CEO, Nisus Finance, “The interest reduction may bode well for the real estate buyers, particularly the NRIs who are financially more secure and well-placed than the domestic buyers. However, the inward remittances in the housing sector may grow only when the Indian Government successfully contains the virus and issues a safe travel advisory for the international fliers.”
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The depreciating value of Rupee
While the falling rupee value might be troublesome for the economic growth of the country, it can be considered as a golden opportunity for the NRIs to undertake bigger and better Indian real estate prospects. Moreover, investment in residential real estate in India is considered the safest bet more inquiries from NRI buyers may grow.
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Reduced returns on other investments options
The majority of Indian investors like to play it safe and undertake low-risk investments. However, due to the pandemic, the value of such low-risk investments has been eroded too. The returns on fixed deposits suffered a hit too as many lending institutions including India’s largest bank, State Bank of India have also reduced the interest rate in the fixed deposits by 15bps. Thus, the reduced returns on other investments options might shift the focus of NRI investments in Indian real estate.
Due to the pandemic and constant lockdowns, people have started to gain more interest in the real estate sector more than ever. Homebuyers today can spend a considerable amount of time searching, analyzing, and evaluating the properties across the country to turn them into their dream house.
As many companies have already given a green signal to work from home, many people have decided to move into a bigger and better property. We can consider the NRI investments in the Indian real estate market as a silver lining.
Also, Read: Guide For NRI Home Loan In India