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NRI investments in Indian real estate to rise to $13.1 bn in FY21

Sanjeev Sinha
real estate, real estate in India, NRI, NRI investment in real estate, RERA, affordability, Global Uncertainty

In the past few years, NRIs have come strength to strength in the Indian housing market. Once a limited force, the expatriate community currently accounts for a sizable part of Indian housing demand. As per a report by 360 Realtors, India's leading real estate advisory, in FY 21, a total of $13.1 billion of NRI capital is expected to enter the Indian housing industry, growing by 5% on a YoY basis.

As a leading player in the NRI space, 360 Realtors has been tracking the NRI buying patterns over the past few years. As per the data available with the company, NRI investments will rise to $13.1 billion in FY 21 from $6 billion in FY 14, growing by a little less than a CAGR of 11%. Major sources of NRI investments include the USA, Canada, GCC, UK, Singapore, Malaysia, etc. Interestingly, GCC is the biggest source of NRI investments, accounting for around 42% of the total investment inflow. As there is no citizenship option available in the Gulf region, it is natural for the expatriates living there to buy a home in India.

"NRIs are one of the crucial growth drivers for the Indian real estate. Post RERA implementation, the confidence levels of NRIs have gone through the roof. Interestingly, NRIs are not buying for end-use, but many are entering the market with a pure-play investment purpose. There are many NRIs are who are maintaining a portfolio of properties," said Ankit Kansal, Founder & MD, 360 Realtors.

Flight to Affordability

The flight to affordability is visible amongst the expatriate population as well. In FY 21, estimated average ticket sizes have come down in major source markets such as the USA, Saudi Arabia, & Singapore, etc. In the USA the average ticket sizes have dipped to $111,000 from $113,000 a year before. In Saudi Arabia, the average ticket sizes have corrected by around 5% to $67,000. In Singapore, as well the average ticket sizes have eased out by slightly over 3% to $91,000. In UAE, another crucial source market, the ticket sizes have risen to $87,000 from $85,000 in the previous year.

Global Uncertainty will further trigger NRI Investments

"NRIs will continue to get drawn towards the Indian real estate in big volume in the foreseeable future. Apart from an emotional connection with the country of their origin, a weakening Indian rupee & discounted prices of Indian properties will act as an important stimulant," added Kansal.

Prices in India are yet touching their peak values. Developers are also coming with discounts to move their inventories. Likewise, rupee values are also depreciated. Collectively, this is rendering a discount to the tune of around 20-25% to the NRI buyers, thereby further pushing ahead their interest in the Indian housing markets. There is an atmosphere of global uncertainties underpinned by trade-war between USA & China, the slowdown in major global economies & escalation in geopolitical tensions. Hence, many NRIs are getting into the property market to hedge against potential risks as well.