NRI Real Estate Investment in India
Despite the ongoing global economic slowdown, the Indian real estate market has been growing over the past few months. The growing involvement of Non-Resident Indians (NRIs) in the Indian real estate market is a significant factor in this expansion. Since NRIs have always played a significant role in the Indian real estate market, and as more and more of them look to make investments in their native countries, it is anticipated that NRI real estate investment in India will reach a record-breaking USD 14.9 billion in FY23.
NRIs are drawn to the steady returns offered by the Indian real estate market, whether it’s to secure their future or to maintain a connection to their roots. In India, NRIs are investing in both residential and commercial properties as home prices continue to fluctuate depending on the region and are on the rise in others.
This blog aims to examine the various aspects that influence NRI real estate investments in India and the reasons why this pattern is expected to persist. We’ll examine the factors that make the Indian real estate market a profitable investment choice for NRIs, from the economy’s potential for growth to the government’s push for affordable housing.
Effects of Exchange Rate Changes on NRI Real Estate Investment in India
One of the most important aspects of an economy is the value of its currency, which is influenced by a number of variables including inflation, interest rates, political stability, and economic stability. The Indian rupee (INR) has seen a sharp decline in value recently when compared to the US dollar (USD). The exchange rate was Rs 74.51 per USD at the beginning of the year, but it decreased by nearly 11.40% to reach an all-time low of Rs 83 in October 2022. The exchange rate has been fluctuating between Rs 81 and Rs 82 per USD recently due to this ongoing depreciation.
On the other hand, the INR has declined over time relative to the USD, the Euro, the Canadian Dollar, and the Singapore Dollar. These currencies have appreciated because of their high levels of economic and political stability, high interest rates, and low inflation. NRIs (non-resident Indians) who reside in nations with stronger currencies relative to the INR profit from this appreciation.
Rising Demand for Luxury Homes in India among NRIs
Luxury homes are in greater demand in India, especially among Non-Resident Indians (NRIs), who are looking for a secure place to put their money. They view purchasing a luxury home as an excellent investment because it fits their lifestyle, has a high rate of appreciation, and provides stable rental income.
The top seven real estate markets and luxury micro-markets in India have seen average monthly rent increases of 8–18% in recent years. With luxury homes increasing from INR 2 lakh per month in 2020 to INR 2.35 lakh per month in 2023, Mumbai’s Worli neighborhood experienced the highest rental growth (18%). Rajaji Nagar in Bengaluru saw a 16% increase in rent from 2020 to 2023, going from INR 56,000 per month to INR 65,000 per month. With average prices rising from INR 5,698 to INR 6,200 per square foot in 2023, the region also experienced the highest capital appreciation, at 9%.
Over the past two years, capital growth in these high-end housing markets has been consistent, varying between 2% and 9%. This demonstrates that there is still a high demand for luxury homes in India and that investors are still getting good returns on their investments. With these developments, it is evident that the luxury housing market in India is set to expand further over the next 12 months.
Growth-Spurring Transformative Policies in the Indian Real Estate Sector
In recent years, the Indian real estate market has undergone a significant transformation, shifting toward a customer-focused market driven by cutting-edge policy initiatives. Transparency, credibility, and profitability in the market have all increased with the establishment of the Real Estate Regulatory Authority (RERA) and rules governing stamp duty and Goods and Services Tax (GST) payments.
Because of this, the luxury housing market continues to draw high-ticket purchases from wealthy clients, and investors and prospective buyers are moving quickly through the decision-making process. Over $13 billion was invested by non-resident Indians (NRIs) in the residential real estate market in India last year, and this amount is expected to rise by roughly 14% in the coming year.
The markets that have attracted the largest share of these investments are Mumbai and the Gurugram region, attracting both NRIs and local investors. The combination of favorable policy changes and increased investment in the real estate sector is expected to continue driving growth and positive outcomes for the industry in India.
In 2023, why should you consider investing in real estate?
Non-Resident Indians (NRIs) and Indian citizens have a special opportunity to invest in real estate this year. With a focus on becoming more customer-focused and transparent, India’s real estate market has undergone significant changes recently. The introduction of the Real Estate Regulatory Authority (RERA) and regulations around stamp duty and Goods and Services Tax (GST) payments have increased the credibility and profitability of the market, making it an attractive investment option.
With an increase in the number of industries reporting positive growth and a decline in unemployment, the Indian economy has also demonstrated strong signs of recovery. It is anticipated that this economic expansion will result in higher demand for residential and commercial real estate, increasing the appeal of real estate investments.
Additionally, interest rates are at an all-time low, which makes it simpler for Indian citizens and NRIs to obtain loans for real estate purchases. The Indian government has also put in place a number of initiatives to promote investment in the real estate market, such as tax breaks for first-time buyers and initiatives for affordable housing.
Here’s the easiest way to invest in real estate in India!
A great way to diversify your investment portfolio and possibly produce long-term returns is to invest in commercial real estate. Individual investors, however, may find it difficult to manage the investment process and find the right assets. That’s where Assetmonk comes in.
A cutting-edge real estate investment platform called Assetmonk offers stunning properties in India’s largest cities. Assetmonk provides a hassle-free real estate investment experience for those looking to invest, with a focus on commercial properties. The platform lowers the risk of real estate investments by giving investors access to carefully selected assets in desirable locations.
In order to give investors the knowledge they need to make wise investment decisions, the platform also performs thorough due diligence on each asset, including market analysis, property inspections, and financial analysis.
Real Estate Investment for NRI FAQ's:
For an NRI Is would prove beneficial to Invest in Real Estate in India in 2023. According to statistics, 2023 is going to have great potential for both commercials as well as residential real estate companies. In the last couple of years, co-ed offices and other commercial spaces have gained impressive tractions in most of the cities with IT players contributing a ton to the majority of the demands.
When NRIs invest in properties in India they get to invest in India and this helps to further bolster India’s economy. Foreign investors are also a crucial source of funds for the Indian economy. Currently, NRIs can easily invest in the Indian property market through a professional and take advantage of booming growth.
By the time of 2040, the real estate sector is expected to grow to 65,000 crore INR ($9.30 billion) from a previous 12,000 crore INR (US$1.72 billion) in 2019. And this is expected to contribute to a huge chunk of 13% of the country’s GDP by the time of 2025.
The chances of any sudden increase in prices are fairly low and one can expect to see a change of 6-10% in the coming months. Any moment when the prevailing prices in the realty sector would be at their bottom, that would make it the appropriate time to invest in real estate.
Selling the property around April to June would see one entering the market that traditionally would have a fairly large number of buyers and this is the time when most properties sold. But the best time to purchase a property would be the Spring months, as this is the time when the demand is usually low. One should note that this may change in the future.
The moment when one get’s access to the right investment tools, one doesn’t even have to ask whether it is a good time to invest in real estate. Any moment is an appropriate moment to invest. However, some housing sectors would always remain tougher than the others, but with the right knowledge, tools, and expertise, one would be positioned to make decisions with confidence and ease.
Real estates and stocks include different risks, opportunities, and gains. Real estates are not as liquid as stocks but need more money as well as time. However, it does give a passive income stream.
Commercial properties present more earning potential than residential real estate. Although it would be easier to buy a residential property, commercial agents do get a higher commission from the property they sell.
One can easily sell residential properties but needs to be licensed to sell certain non-residential properties; i.e, commercial, industrial, or retail properties
As per the Income Tax Act, if an NRI owns more than one residential property, only one of them will be considered as self-occupied. And, there would be no income tax upon a self-occupied house.
The Indian rupee (INR) has faced a significant decline against the US dollar (USD) in recent years, which has made real estate investments more expensive for NRIs living in the US. However, NRIs living in countries with currencies that have appreciated against the INR, such as the Euro, Canadian Dollar, and Singapore Dollar, have benefitted from the appreciation.
NRIs see luxury homes as a safe investment opportunity that aligns with their lifestyle and offers a high rate of appreciation and sustainable rental income. In recent years, luxury housing markets in India have shown steady capital appreciation and rental growth, making them an attractive option for investors.
The introduction of the Real Estate Regulatory Authority (RERA) and regulations surrounding stamp duty and Goods and Services Tax (GST) payments have increased transparency, credibility, and profitability in the market. These policies have attracted high-ticket transactions from wealthy customers and accelerated decision-making processes for investors and potential buyers.
The Indian economy has also shown signs of strong recovery, with a growing number of industries reporting positive growth and a decrease in unemployment. Interest rates are at an all-time low, making it easier to secure loans for real estate purchases, and the Indian government has implemented measures to encourage investment in the real estate sector, thus making 2023 a good year to invest in real estate.
Mumbai and the Gurugram region have attracted the largest share of NRI real estate investments, along with local investors. These regions have seen significant growth due to a combination of favorable policy changes and increased investment in the real estate sector.
Yes, NRIs are investing in both residential and commercial properties across India, depending on their investment goals and preferences. Some NRIs are investing in luxury homes for rental income and capital appreciation, while others are investing in commercial properties for long-term income streams.
NRI real estate investments in India are expected to reach a record-breaking USD 14.9 billion in FY23, driven by factors such as the growth potential of the Indian economy and the government’s push for affordable housing.