India’s first-quarter home sales have already hit their highest level since 2015.
With the appreciation of the US dollar against the Indian national rupee, India remains a preferred destination for residential and commercial real estate.
The experience of the pandemic and the current economic trajectory have caused many to consider investing in their home countries.
GCC demand queries are increasing exponentially across price ranges in high end and luxury categories.
The trend also underscores their need to be close to family, with some investing with the aim of having a home base, should they decide to retire in India.
Industry data suggests that NRIs invested over $13.1 billion in the Indian property market last year and will grow by 12% in the current financial year.
Moreover, first quarter home sales in India have already reached their highest level since 2015. These positive trajectories only increase the attractiveness of NRIs who want high-end, metro and rural investments.
“Indian real estate has always been a market of huge opportunity for NRI investors from GCC countries. As the Indian rupee hits record highs against the dollar, there are all kinds of ripple effects and Buying property in India is now relatively accessible for NRIs earning overseas and keen to take advantage of these high returns, therefore we are seeing a higher level of enquiries. residential real estate because in fact the residential asset class has always given high appreciation and been a safer investment option, being much more mature in terms of coverage in different cities of India and flexibility in the ‘offering options for just about every budget,’ said Aakash Ohri, Group Executive Director and Head of Commercial Offering, DLF Ltd.
NRI investment in Indian real estate is expected to grow by 12% this year with continued development activity and resurgent economic momentum. In fact, the trend has created a specific market segment for high-rise buildings and integrated townships across metros, as well as large vacation homes in the countryside and coastal areas. Places like Shimla, Kasauli, Mussoorie, Goa and metropolitan areas like NCR, Pune, Kochi and others are attracting a lot of interest. Luxury interiors and amenities, with a focus on the environment and well-being, are often required by NRIs when shortlisting property options.
Ohri further added, “At present, when property prices are higher and the Rupee is weaker, from the perspective of the NRI, the arbitrage opportunity is significant. Factors such as a simplified tax regime and an indexation benefit for properties held in India encourage NRI buyers to park their excess cash in India. Other key decision factors are factors such as lower interest on home loans, digitization of procedures and transparency of regulations”
It is reported that the queries from GCC countries (UAE, Oman, Kuwait, Saudi Arabia and Qatar) among other Asian regions are the highest. The GCC constitutes nearly half of India’s NRI and the world’s expatriate population, approximately 7.5 million. Given geographical proximity, favorable political outlook, current exchange rates and the benefits of indexation, India is and will continue to be a hotspot for “domestic” demand, attracting more FDI and circulating a positive sentiment for the interior sector.
Meanwhile, institutional investment in Indian real estate reached $2.6 billion in the first half of 2022, a 14% increase from the first half of 2021.
Investors are excited about the recovery seen across the Indian real estate spectrum, following the Covid-19-induced disruptions.
Inflows in the first half of 2022 were led by the office sector which accounted for about 48% share, followed by the retail sector with a 19% share, according to a survey by Colliers India.
On a quarterly basis, inflows in the second quarter of 2022 are up from the previous quarter, while registering a 50% increase over the average quarterly inflows of 2021.
“The first half of this year has seen business euphoria rebound with increased office and industrial rentals, retail and travel spending, and continued momentum in the residential sector. However, the market is showing some caution amid geopolitical tensions and rising expected risk-adjusted returns.India investment continues to rise in both development and operating assets.Domestic investors were predominantly biased toward mixed-use assets and the retail sector.
However, investments continue to be driven by foreign investors, in which pension funds and sovereign wealth funds are betting on income-generating assets in the office, retail and industrial sectors.
During the first half of 2022, the office sector collected around 48% of investments. Investors are seeing encouraging signs of recovery in the office sector since the end of last year.
While a hybrid working style is the dominant way of working, big tech companies continue to rent office space. Investors are taking a medium to long-term view of the sector, with the intention of consolidating assets into REITs. As a result, investment in the office sector increased by 20% year-on-year in the first half of 2022.
The retail sector saw a 19% share of investment, with investors turning to completed malls as an avenue for investment. The Indian retail market is witnessing an expansion of fashion and F&B brands.