Is It The Right Time For NRIs To Invest In Indian Real Estate?

Non-Resident Indians (NRIs) have always been keeping an emotional connect to their homeland. However, the second surge in Covid-19 cases left many NRIs who possess properties in India or plan to buy one with many questions. Some must be wondering whether the pandemic has increased their emotional connection with their motherland or triggered.  

Though the primary purpose of Non-resident Indians to invest in real estate has been for rental purposes, the pandemic across the world has motivated the NRI community to own a property in India as well. As the deposit rates falling in the range of 6-7 per cent, and the value of the rupee is declining against the US Dollar, the NRIs are actively looking for investment opportunities in India. Along with the depreciation of the rupee against the US dollar, the aspiration of NRIs to own a long-term asset and moving back to India has also been a key factor.

Since the pandemic has limited the scope of site visits, and most of the real estate groups offer virtual visits. These virtual visits enable the NRI community to browse, select and invest in real estate online.

NRI investment in Indian real estate in Financial Year (FY) 2021 stood at $13.3 billion as per reports. The market in FY 2021 had witnessed a six per cent higher business. 

If you plan to buy a house with loan it might be right time to do so as the interest rates of home loans are a decade low now. Also you can avail a credit amount up to 80% of property value. But, keep one thing in mind that it is better to use Non Resident External (NRE) account to get loan. This would help you to repatriate the investment when you sell your property off. 

However, the uncertainties posed by the pandemic must trigger another section. The pandemic has hit the country bad and unsure about how the situation may evolve after the pandemic, few are selling their properties in India. The costs involved in managing (ancestral) property, specifically now when rents have gone down around 10-15 per cent during the pandemic.

If we look at recent property deals in Delhi’s posh areas, as much as 30-40 per cent of high-end properties that have been sold in locations like Golf Links, Sunder Nagar, Jor Bagh NRIs belonged to NRIs, said a report by Moneycontrol. These properties have been sold out for prices that are almost 25% lower than pre-demonetisation levels.

Amit Goyal, CEO at India Sotheby’s International Realty, believes that one of the major reasons for most NRIs selling their properties because of the logistics, lower rental yield, and rupee depreciation. “Logistical issues include managing properties, titles etc. that pose a concerning challenge to NRI,” elaborates Goyal. “Besides, rental yield is just 1.5 per cent per annum.”

Though such minor trends are being witnessed, it has not emerged as a pan India scenario. However, this might not be termed as a pan India trend. 

The NRIs investments in Pune, Mumbai and Bangalore remain the same. In fact, Bangalore has emerged as the most favourite destination for NRI investors.

Moreover, the NRI investment in the Indian real estate sector is expected to reach $15 billion in FY 22.

So, considering various factors including the value of the rupee, real estate pricing and low-interest rates of home loans, it would be the right time to own a property in your motherland. 

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