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The Indian real estate sector has continued to thrive, even amidst the pandemic. The COVID-19 crisis served as a catalyst, changing the way home buyers perceive properties. With reduced stamp duty rates and unchanged circle rates, the demand for real estate in India witnessed a significant rise, particularly from the NRI community. As the sector evolves, it becomes an increasingly promising investment choice for NRIs. This blog combines real facts, reasons, and benefits to shed light on NRIs’ growing interest in luxury homes in India.
Residential Real Estate:
NRIs have traditionally favored investing in the Indian residential real estate sector. In the past year, up to $13.1 billion was invested in residential properties, with a projected 12% growth this year. Mumbai, Gurugram and Bangalore have emerged as top markets attracting a substantial portion of these investments.
Favorable Exchange Rates:
The Indian Rupee (INR) has witnessed a decline against the US Dollar (USD), hitting an all-time low. This depreciation benefits NRIs, especially those residing in countries with stronger currencies. The conversion rate enables them to multiply their investments more effectively, providing them with better bargains.
Rising Interest Rates Globally and Stable Prices in India:
Global central banks have been raising interest rates to control inflation, leading to housing market pressures in countries like the US and China. However, the real estate investments made in India are primarily driven by end-users seeking personal properties or homeowners upgrading to more comfortable spaces. This limited pressure has kept home prices stable or even declining in certain markets, presenting opportunities for NRIs.
High Demand for Luxury Housing:
NRIs have historically shown a preference for investing in luxury housing that aligns with their lifestyle choices. Rising income levels in India have also contributed to the increased demand for luxury properties. Investments in luxury real estate tend to yield higher appreciation rates and lifelong rental returns due to the demand from affluent individuals.
Rental Yields and Capital Appreciation:
Luxury micro-markets in India’s top cities have witnessed significant growth in average monthly rentals over the past two years. For example, Worli in Mumbai experienced an 18% increase, while Bengaluru saw a 30-40% rise during the same period. Capital appreciation in these luxury housing markets has remained steady, ranging from 2-9% over the past two years. These factors make luxury real estate investments attractive for NRIs seeking rental income and long-term value appreciation.
Investor-Friendly Government Policies:
The Indian government has implemented investor-friendly policies, such as the Real Estate (Regulation and Development) Act (RERA) and payment regulations, which have increased transparency and credibility in the market. These measures have instilled confidence in investors and propelled decision-making processes.
The growing interest of NRIs in luxury homes in India is backed by real facts and offers numerous benefits. The Indian real estate sector provides a preferred asset class for NRIs, favorable exchange rates, stable prices, high demand for luxury housing, attractive rental yields, and capital appreciation potential. Additionally, investor-friendly government policies have transformed the market, making it more transparent and profitable. NRIs considering real estate investments can leverage these factors to secure a promising future in the Indian luxury housing market.