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Bengaluru- Hot NRI Investment Destination

Torbit - January 09, 2022 - - 0 |

Despite the big setback caused by Covid-19 pandemic to the real estate sector, the rising trend of home ownership post-covid has pushed demand for homes not just from Indian buyers but also from the NRIs who have evinced greater interest for making investment to buy home.  Among cities like Delhi, Pune, Chennai, and Mumbai, Bangalore has emerged as NRIs’ top favourite investment destination for residential and commercial properties

Bangalore has always been a steady market for real estate. So, the demand for residential and commercial properties is significantly high. Today, with offices resuming offline operations after the ‘work from home’ module and colleges & universities reopening offline classes, the demand for home purchases has significantly increased. Being an IT hub, Bangalore gets a steady inflow of individuals (for education and work) every year. This is the primary reason behind the increasing demand for residential properties across the city. What has kindled the high interest of NRIs in Bengaluru and why the city is the best investment option for them. The main attraction in the real estate market is the availability of varied categories of products for investments, be it affordable, luxury, or uber-luxury projects and even plotted developments. Besides cosmopolitan culture, advanced infrastructure, socioeconomic conditions, tax privileges, and home loan subsidies, there are some significant factors that support the demand for the city as the top destination for NRI investors.

Bengaluru boasts of exceptional connectivity to prime locations. Micro markets like Whitefield, Electronic City, Hebbal, Devanahalli, Yelahanka, Hennur, Jakkur, Sarjapur Road, and Thanisandra have witnessed a great response from buyers and proved to be the hot-selling real estate investment corridors. These locations are close to the tech parks, office spaces and are well connected to the airport and railway station.

The Karnataka government’s sop of reducing stamp duty from 5% to 3% for properties worth Rs 45 lakh has positively resulted in cost savings for the homebuyers including NRI buyers. Moreover, there are varied types of properties with high appreciation. NRIs are spoilt for choices when buying a property in Whitefield and Sarjapur as they offer high appreciation rates. The properties include residential apartments, villas, studio apartments, commercial developments, and many more. They can easily choose the type of project to invest in, depending on the budget, time frame, and the amenities offered at the particular development.

Good returns on affordable investment in Bengaluru is a major attraction for property buyers. With top IT hubs and industrial set-ups, Bangalore garners the attention of the NRI investors with ease. A large chunk of students and working professionals’ throng the city each year and create demand for home buying and rental housing. Thus, investment in a residential property result in a high rental income for the owners, ensuring good returns on affordable investment.

Sathish CG, Director CASAGRAND

TORBIT UPDATE:

Housing Supply & Housing Absorption

 City-wise New Supply (In Units) and Y-o-Y percentage change
 City Name 2021 2020 %Change (2020 Vs 2021)  Q4-2021  Q4-2020  %Change (Q4-2020 Vs Q4-2021)
NCR 31,710 18,530 71% 12,720 5,520 57%
MMR 56,880 30,290 88% 18,680 11,910 36%
Bengaluru 30,650 21,420 43% 8,580 6,400 34%
Pune 39,870 23,920 67% 10,840 11,200 -3%
Hyderabad 51,470 21,110 144% 15,320 12,820 16%
Chennai 12,370 9,170 35% 1,670 3,930 -136%
Kolkata 13,750 3,530 290% 5,960 1,040 473%
Total 2,36,700 1,27,970 85% 73,770 52,820 40%

 

 City wise Absorption (In Units) and Y-o-Y percentage change
 City Name 2021 2020 %Change (2020 Vs 2021)  Q4-2021 Q4-2020  %Change (Q4-2020 Vs Q4-2021)
NCR 40,050 23,210 73% 17,580 7,760 127%
MMR 76,400 44,320 72% 27,680 17,600 57%
Bengaluru 33,080 24,910 33% 12,300 7,900 56%
Pune 35,980 23,460 53% 11,930 9,260 29%
Hyderabad 25,410 8,560 197% 11,030 3,570 209%
Chennai 12,530 6,740 86% 4,680 2,460 90%
Kolkata 13,080 7,150 83% 5,660 2,350 141%
Total 2,36,530 1,38,350 71% 90,860 50,900 79%

 Torbit Trends 2022 

  1. Yukti Nagpal, Director Gulshan Homz
  2. Shalin Raina- Managing Director Residential Services Cushman & Weikfeild
  3. Kapil Malhotra, Sales Director & Principal Partner Square Yards
  4. Ananta S Raghuvanshi, Founder President-Elect, NARDECO MAHI
  5. Sanjeev Kathuria, Founder, Author & CEO, Torbit consulting 

TRENDS 2022:

Great Investment Opportunity in Housing

Dr Atul Goel, MD, Goel Ganga Group & President-Elect, Naredco Pune

The Covid-19 crisis has revealed about the nature of the real estate industry- spine made of steel and a soul made of concrete. As an industry, real estate has demonstrated remarkable resilience in 2021. Going forward, the highly resilient real estate is set to further improve its performance in 2022, Several key trends and factors will further shape up real estate as an asset class with great investment opportunity.

Homebuyer to continue calling shots

The coronavirus pandemic was a sudden blow to society at large. And while it led to an inevitable and unprecedented slowdown in site visits, what also happened is that the human population as a whole suddenly realized the importance of home. When the whole world went into lockdown mode, people realized that their home is their first and best defence against the vagaries of the outside world. People started working from home, kids started studying from home and everyone realized that they now had new expectations and new requirements from their home. They needed more space, they needed better planned homes that provide complete lifestyle solutions.

The real estate industry responded superably and new projects were designed and launched, considering the changed needs of buyers by keeping the home buyer at the center of all planning and designing. This, in addition to attractive schemes such as deferred instalments, reduced down payments, EMI holidays, free home furnishings, stamp duty payment borne by the developer and group discounts are expected to continue in the new financial year. With the pandemic still not over, the home buyers should be making most of the opportunities to grab a home designed around their needs.

Affordable home financing to continue

The period of the Coronavirus crisis was also the period of historically low home loan interest rates. The Reserve Bank of India continuously maintained the accommodative stance and kept the Repo rates as low as 4.25 percent. It had a direct bearing on the housing loan disbursements, and the home loan interest rates remained low. Even today, the home loan rates of most of the public and private sector banks remain in the range of 6.50-9.50 percent. These are quite affordable for the middle class, which makes up the major chunk of new home buyers in India. With restrictions easing up and site visits restarted, the home buying trend is certain to pick up, especially as housing finance rates will remain affordable in the next financial year. But there is a word of caution for home buyers – don’t be fence sitters as wait and watch policy could prove detrimental to your interests; With rising sales, your dream home is not going to wait for you for long, especially the ready-to-move inventory for which you do not have to pay any GST.

Handsome Return on Investment (ROI)

One fact is clearly evident. The housing demand is on the rise and growing rapidly. If the latest report of CBRE- India Market Monitor, is considered, sustained attractive mortgage terms and government incentives are considerably driving the housing sales. The residential sales surged 46 percent QoQ to 50,000 housing units in the third quarter of 2021 and a solid 86 percent on a YoY basis. Therefore, despite challenges and upheaval due to the pandemic, the residential sector has shown great resilience and will continue to do well in the coming financial year. This trend of robust and recovering demand will ensure a noticeable return on investment as residential prices are bound to surge in the near future. For example, if someone invests Rs 1 crore in a home in any of the top eight cities of India, an overall ROI of 25-30 percent can be expected comfortably.

Price rise is inevitable 

The challenges posed by the coronavirus to the Indian economy were like a chain reaction. The input cost in the construction sector increased by over 20 percent due to rising prices of fuel, steel, bricks, and cement etc. This fact is reinforced by the recent RBI Housing Price index, which has revealed that all India HPI recorded a 2.6 percent growth YoY in Q2 2021, as compared to 2 percent in the previous quarter. Moreover, the recovering demand has also led to the clearing and sale of ready stocks by leading developers. This will also provide a chance to the real estate fraternity to increase prices. Experts believe that a price hike of 10-15 percent is inevitable in the housing markets across India.

More affordable housing options

As the central government’s flagship Pradhan Mantri Awas Yojana (PMAY) is culminating in the year 2022, this financial year will remain dedicated to the rollout of the affordable housing schemes and making the provision for low-cost homes. Real estate developers engaged in providing affordable housing, will get cheaper loans and other rebates. In addition to this, the lower middle class to economically weaker section (EWS) of the society will have more housing options as the government is encouraging new housing technologies, which have brought down the cost of housing units significantly.

Best time to invest

Real estate experts/analysts strongly believe that this is the best time in a decade to invest in a home. With prices at their lowest and a supportive finance mechanism, one can’t afford to defer the decision to buy a home. We must also caution that this rosy period may not last long as once the market gets fully recovered, the prices will soar, and homebuyers might have to shell up to 30 percent more money than the present-day prices. If you have waited for long, this is the time to invest.

In conclusion, the real estate market is on the upswing and the market conditions are making it all the more attractive to buy a home. It will be a judicious decision by the prospective home buyers to avail the present opportunity to own a home.

BLURB: With the current home affordability and 10-15% expected increase in prices, there can be a handsome ROI of 25-30%.

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