India continues to be a popular location for both residential and commercial real estate despite the strengthening of the US dollar versus the Indian National Rupee.
Many people are considering making investments in their country as a result of the pandemic experience and the present economic trajectory.
Demand inquiries from the GCC are skyrocketing in all price ranges for premium and luxury goods.
The tendency highlights their desire to be near their relatives, and some are investing in order to have a home base there in the event that they choose to retire in India.
According to industry data, NRI investments in the Indian real estate sector exceeded $13.1 billion last year and are expected to increase by 12% this fiscal year.
Additionally, Indian property sales in the first quarter already increased to their highest level since 2015. These encouraging trends are only increasing the demand from NRIs interested in high-end investments in both urban and rural areas.
For NRI investors from GCC nations, Indian real estate has historically offered them a market with numerous prospects. We are receiving more queries as a result of the Indian rupee’s record-low value relative to the US dollar. As a result, buying real estate in India is now more accessible for NRIs who work overseas and want to benefit from the high returns.
This is especially true for residential real estate, as it has historically shown high appreciation and has been a safer investment choice due to its greater maturity in terms of coverage across different Indian cities and flexibility in offering options for just about every budget, according to Aakash Ohri, Group Executive Director and Chief Business Offer at DLF Ltd.
With ongoing construction and a recovering economy, it is anticipated that NRI real estate investments will increase by 12% this year. In reality, the tendency has given rise to a distinct market niche for high-story buildings, integrated townships throughout urban areas, as well as sizable vacation homes in rural and coastal areas. Shimla, Kasauli, Mussoorie, Goa, as well as urban areas like NCR, Pune, Kochi, and others, are attracting a lot of attention. When NRIs are narrowing down real estate alternatives, luxury interiors and amenities with an emphasis on the environment and wellbeing are frequently requirements.
Ohri continued, “From the NRI standpoint, the opportunity for arbitrage is enormous in the current environ, meant when property values are higher and the rupee is weaker. NRI buyers are encouraged to lodge their excess funds in India by factors like a simpler taxation system and an indexation bonus for properties kept in India. Other significant deciding factors are lower interest rates on mortgages, digitization of processes, and open rules.
According to reports, among other Asian regions, questions from the GCC countries (UAE, Oman, Kuwait, Saudi Arabia, and Qatar) are the most frequent. Nearly 7.5 million Indian NRIs and expatriates living in the GCC, which accounts for almost half of their global population. India is and will be a hotspot for “back home” demand, bringing in more FDI and spreading a positive feeling for the domestic sector because of the country’s closeness to other countries, its favorable policy outlook, the present currency rate, and the benefits of indexation.
Institutional investments in Indian real estate reached $2.6 billion during the first half of 2022, an increase of 14% from the first half of 2021.
Investors are encouraged by the revival in Indian real estate after disruptions brought on by Covid-19.
According to a poll by Colliers India, the office sector led inflows during the first half of 2022 with a share of roughly 48%, followed by the retail sector with a share of 19%.
Inflows into Q2 of 2022 are up over the prior quarter on a quarterly basis, and they are up 50% from the average quarterly inflows of 2021.
“Businesses have been ecstatically rebounding back in the first half of this year, with increasing office and industrial leasing, retail and travel spending, and continued vigour in the residential sector. Geopolitical concerns and rising expected risk-adjusted returns, however, are causing the market to display some caution. Both operating and development assets are being invested in more and more in India. Domestic investors tended to favour mixed-use properties and the retail industry.
Nevertheless, foreign investors continue to drive investments, with pension and sovereign funds placing bets on income-producing properties in the office, retail, and industrial sectors.
The office sector attracted over 48% of the investments in H1 2022. Since late last year, investors have noticed positive signs of a recovery in the office sector.
Large technological corporations continue to gobble up office space even though a hybrid style of work is the predominant form of working. Investors plan to bundle assets into REITs by having a medium- to long-term view of the industry. As a result, in the first half of 2022, investments in the office sector increased 20% YoY.
As investors turn to completed malls as an investment opportunity, the retail sector had a 19% share of investments. Fashion and F&B companies are growing in popularity in the Indian retail sector.