Non-resident Indians (NRIs) have always endeavoured to optimize returns on their investment avenues ever since India commenced on the path of economic liberalization. Despite of the status of the market, NRIs always wanted a place back at home. Understanding this need, real estate sector began to cater to this emerging market, hence becoming the most prominent and high return sector by attracting big investments.
The current market is seeing a new trend, 78 percent of NRIs who are looking to invest in real estate in the country, now wish to do so in their hometown. The main reason being the sense of security that NRIs finds in these kind of investments. As the hometowns are considered as investor friendly with a promising future growth.
The hometowns have now taken the preferences from metro cities like Mumbai and Bengaluru. These metro cities may have been the choice of average salaried-class individuals, but no longer for NRIs. As a large share of expat Indians sees their hometown as the top choice above other investment destinations.
Around 82 percent of NRIs have made up their mind that they would regardless put resources into the place where they grew up, despite of the varying circumstances in different urban areas, as it gives them a feeling that all is well with the world.
Those who are planning to come back and settle in India, are also preferring to invest in their hometown only. Near about 70% of the NRIs are even ready to take up a relatively lesser paying job in their hometown, instead of going for a job with higher salary in the metropolitan cities. They are preferring a quality life over the high costed and stressed life in cities. Then there are retiring professionals, who contribute majorly to the home sick category. 90 percent of these are willing to buy a house in the hometown only, denying the risk of living a lonely life among strangers.
According to a survey by the land think-tank amass Track2Realty and its worldwide cooperation accomplices, taking the participation from the NRIs around the world. A choice among the open-finished and close-finished inquiries in the Indian property advertise, NRIs showed a strong inclination towards the property in India, even though they may not plan to live here. They are likely to have greater trust in their ability to make profits in real estate in India.
The other reasons are the strengthening of the US Dollar against the Indian Rupee. Which has raises the affordability of Indian homes. Similar pattern is occurring with the value of currencies in the Middle East. As the property in India goes cheaper to NRIs, they are likely to invest more.
Today’s NRIs want to settle back at home, with friends and relatives. Therefore, opting for a property in a metropolitan city would be continuing the immigrant scenario, even in their own country. This spending in the home town is more of a self-funding personal experience for them instead of an investment.
NRIs are also keeping in mind the comfort and lifestyle that a smaller city can offer, adding the lesser uncertainties and lower investment for business. These hometowns are becoming an ideal choice, promising an ideal growth in the coming years.
Realty Firms Stick To Luxury Projects Backed By NRI Demand
Some builders still continue to bet on luxury homes in the middle of a real estate slowdown when most builders have turned to affordable housing projects, backed by demand from ultra-rich buyers and non-resident Indians (NRI).
Established builders in Mumbai, the National Capital Region (NCR), Bengaluru and Pune have kept their focus on luxury projects.
Mumbai’s K. Raheja Corp. is planning to launch two luxury projects this year in south-central Mumbai, one of the most expensive micro-markets in the country.
Vinod Rohira, managing director, (commercial real estate and REIT), K. Raheja Corp said, “Homes at Rs 15-25 crore and above are for high-value consumers, who are risk-averse, conscious of what they are buying, believe in investing equity (not debt) and prefer homes that are closer to possession. Good sales were recorded even last year, with prices in Vivarea in south Mumbai up by 20% or so compared to two years back.”
Six months after it hit pause as a measure of caution in view of the roll out of the new real estate law, India’s largest developer DLF Ltd resumed sales on 1 November.
Approximately Rs 450 crore of sales were recorded in November and December in two of Gurugram projects by DLF namely – Camellias (homes priced at Rs 28-32 crore) and Crest (Rs 6-8 crore).
According to Rajeev Talwar, DLF chief executive the period of November-December was an exceptional period of sales. He added, “Customers have gone around and checked out projects. Though we sell at a premium, we have seen people showing interest and conversion to hard sales. Luxury homes will be for actual users now, those who have accomplished and are buying for themselves.”
Launch of luxury units was down by 70% to 331 units last year, from 1,112 units in 2016 reported Cushman and Wakefield 31 December data.
Anand Piramal, executive director of Piramal Group and founder, Piramal Realty stated, “The luxury housing segment, for which demand is end-user driven, is witnessing robust growth owing to HNIs (high net-worth individuals) and increasing customer aspirations for a luxurious lifestyle. Such an increased customer appetite works well for our business which aspires to build properties that represent world-class standards of design, construction, and quality.”
In Mumbai Lodha Group plans to launch 3-4 new luxury and high-end projects at Walkeshwar, Lower Parel and Parel. It may also launch a new townhouse development in Pune. Lodha spokesperson said, “Luxury real estate is finally coming of age. Genuine luxury offerings have always found buyers who place utmost importance on aspects like quality, craftsmanship, lifestyle and service standards. Our Lodha Luxury Collection (LLC) does not just score well, it also defines the benchmark for the industry on these parameters.”
Lodha launched the third tower in The World Towers project in Mumbai last year, along with One Grosvenor Square at Mayfair, in London’s West End. It clocked early sales at the London project at around £6,000 per sq. ft. (Rs 5 lakh per sq. ft). The firm expects greater traction from its London project, with a weaker pound helping the cause of Indian buyers.
A prominent developer of luxury and high-quality homes in Bengaluru called the Total Environment Building Systems Pvt. Ltd will launch projects in Pune and Bengaluru this year. Kamal Sagar, principal architect, and chief executive said if customers look at them as buying a home and not just an investment and developers build beautifully designed homes, it works well. He added, “The market has been slow but our approach is customer-centric and customization in projects, which gives us a differential edge.”
Raja Seetharaman, co-founder of Propstack, a real estate data analytics, and solutions firm, “Developers with the financial bandwidth and potential to build luxury projects have sustained the slowdown. Luxury segment prices have also not come down, especially in Mumbai, NCR, and Bangalore.”
NRIs Fuelling Luxury Housing in Ahmedabad
Ahmedabad’s property market is gradually evolving, from one that primarily caters to the mid-segment of housing to luxury housing, all thanks to NRIs. We explain
Ahmedabad, which has traditionally been a cost-conscious property market, dominated by the mass and mid-segment housing, has suddenly witnessed a flurry of launches in the luxury segment. Moreover, this shift has happened at a time, when the overall market in the state is in the midst of a slowdown.
The reason for this, can be traced to the demand from a small but significant set of buyers – the non-resident Indians (NRIs). According to a recent report, more than half (52.7%) of NRIs are contemplating returning to India and settling here, with a significant amount of their investment likely to be in real estate. After being exposed to luxury living overseas, these NRIs would want the same kind of experience back home, thereby, fuelling the luxury housing market in Gujarat. With Ahmedabad, in particular, being tipped as an emerging global city, most of the Gujarati NRIs would want to settle here.
Neeraj Tomar, head – Ahmedabad, JLL India, points out that Ahmedabad will witness a number of new project launches, particularly along the BRTS corridor on Satellite Road extending up to SP Ring Road and the R2 Zone behind Rajpath Club. These projects, will offer genuine luxury specifications, as compared to earlier projects where luxury was merely defined by more space.
“Ahmedabad is one of the preferred cities for NRIs of the state, who are looking to buy residential properties. The city has 2-3 good golf township projects, which are truly classy and definitely meet the definition of luxury. However, they are still being considered as weekend or second homes. The NRIs put in a lot of money in all asset classes like residential, as well as plotted and commercial real estate, with the sole purpose of earning returns on investment,” says Tomar.
Dhaval Ajmera, director of Ajmera Realty & Infra (a Mumbai-based developer who has ventured into Ahmedabad), insists that Ahmedabad has the potential to emerge as one of the best luxury destinations in India, owing to ongoing and planned infrastructure projects, real estate developments, connectivity to other cities and growing industrialisation.
“A number of prominent developers are coming up with luxurious projects in Ahmedabad. Consequently, buyers can choose from a variety of projects that offer new-age luxury and amenities that are a class apart. Various structures are being built, which combine self-sufficient housing, with facilities like an in-house multiplex, post office, petrol pump and shopping mall,” explains Ajmera.
There are also reports that several branded apartments are vying to enter the city. The entry of luxury brands in the city, clearly suggests that the interest level of NRI buyers in the city has been well spotted by market research.
This, of course, is the first wave of luxury housing in Ahmedabad, as most of the developers in this segment are still on a learning curve. Nevertheless, what goes in favour of the city, is the fact that Ahmedabad is still an under-supplied market, vis-à-vis luxury housing. Hence, there is more scope for growth than the saturated traditional luxury markets like Mumbai or Gurgaon.
NRIs’ impact on the realty market
- Ahmedabad is no longer just a cost-conscious affordable and mid-segment housing market.
- NRIs from Gujarat are the major demand drivers for luxury property in Ahmedabad,
- Global branded residential chains are trying to negotiate their entry into Ahmedabad’s property market.
- While luxury brands are making inroads and fuelling home buyers’ aspirations, this segment of housing is still under-supplied.
Why Indian Real Estate Market is a Good Investment Bet for NRIs
As the new financial year kicks in, Indian Real Estate with the NRI Diaspora at the forefront is poised for accelerated growth.
Non-Resident Indians have for long been active and important investors in Indian Real Estate. Settled abroad, NRIs have the advantage of exposure to global standards of real estate. They have been instrumental in bringing financial and technological best practices to India from abroad. The year 2017 has heralded a positive shift in Indian real estate already. Lowering of interest rates, the announcement of new credit linked subsidy scheme has made market finance more accessible. Regulatory updates like RERA and GST are also inducing a lot of positivity in the market. But the biggest news is coming from the affordable housing space which has now been designated with the infrastructure status. NRIs on their part have rewarded these efforts with reinforced confidence and vision.
In this story of rebound, NRIs have taken a strong lead as active buyers of Indian property. The NRI populace at 30 million is almost equal to the entire population of Canada. In 2016, the influence of NRI buyers was clearly observed with rising incomes and improving the economy. As the demographic focused on younger participants, demand for properties in small unit sizes further rose. 2016 is also remembered for some major initiatives by the central government. The Benami Transaction Act, RERA (Real Estate (Regulation and Development) Act, 2016) and demonetization of higher currency notes of five hundred and one thousand were some of the major steps taken by the government to bring in transparency and better real estate transactions. It brought stability and restricted non – serious investors.
By the end of 2016, the total investment in a primary real estate in key Indian markets reached $9.6 Billion. Further, 20 per cent of the NRI investments is made by Non-Residents settled in the UAE. Indians settled in the United States, Canada and Australia also hold significant investments in Indian property markets.
As against $6 billion NRI investments in 2013, the figure is expected to almost double in 2017, with approximately $11.5 billion to be invested this year. This would account for 20% of the total market, estimated to reach the $60 billion mark this year. The figure could go even higher, given the proactive approach adopted by the government in addressing the concerns of the realty sector.
Government intervention alone is not pushing these figures. A depreciating rupee has also provided stimulus to investments from NRIs. The digital medium has also created an unprecedented awareness for property investors today. An online tool like project comparisons carries the ease of comparing different projects on different parameters. Digital is effectively bridging the geographical gap as almost entire information regarding a property purchase is available with the click of a button. So even if a non-resident is physically able to visit the project site, he/she can still make informed decisions using online resources.
As the new financial year kicks in, Indian Real Estate with the NRI Diaspora at the forefront is poised for accelerated growth.
Source: The Financial Express
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