NRI Investments Trigger Residential Growth

Torbit - November 13, 2022 - - 0 |
NRI Investments Trigger Residential Growth

The demand for real estate as an investment class continues to grow with close to three fourth of NRIs preferring residential real estate investment over stocks, FD, gold etc. NCR, Bangalore and Hyderabad are the top three cities which are high on the radar of NRIs.

The depreciating rupee value and the continuing buoyancy in the Indian residential real estate market are significant draws for NRIs to invest in their country of origin.The latest CII-Anarock Consumer Sentiment Survey for H1 2022   shows that Hyderabad, NCR, and Bengaluru are NRIs’ top picks for housing investment. Interestingly, MMR comes a distant fourth on NRIs’ wish list.

Significantly, at least 60% NRIs  stationed in the US, Canada, Gulf, Europe and various Asian countries will buy homes in one of these three cities, with 22% focused on Hyderabad, 20% eyeing NCR, and 18% preferring Bengaluru. In last year’s corresponding period survey, Bengaluru, Pune and Chennai were the top picks for most NRIs.

Top 3 Favourable Cities for Investment in India
Pre Covid (H1 2019) Covid (H1 2021) Post Covid (H1 2022)
Bangalore, Hyderabad & NCR Bangalore, Pune & Chennai Hyderabad, NCR & Bangalore

Source: ANAROCK Research

Notably, more NRIs prefer investing in Indian real estate over stocks, mutual funds, gold, and fixed deposits. In the H1 2022 survey ,71% NRI respondents saw Indian housing as the best investment bet. This is markedly higher than the 55% in the pre-Covid edition.

According to  Prashant Thakur, Sr. Director & Head – Research, Anarock Group, securing homes in India became, and remains, a priority for Indians everywhere. While domestic homeownership sentiment remains strong despite hardening of  home loan interest rates and property prices, the depreciating rupee value against the US dollar has given NRIs a distinct advantage. Housing has seen a 15-20% increase in NRI demand in the first nine months of 2022 compared to the corresponding period in 2021. As per Anarock Research, the January-September  period of 2022 saw approximately 2.73 lakh homes sold in the top 7 cities and  NRIs account for 10-15% of homes sold in any given quarter.

Demand for bigger homes has been one of the defining new developments in the post-Covid era. While schools and offices have reopened, the desire for extra living space remains undiminished. Many of the large IT employers companies and IT-driven start-ups now operate on a hybrid work model.For NRIs, the favourable exchange rate is a prime motivator to secure bigger homes. The current H1 2022 survey finds that over 77% NRIs will buy bigger homes – 54% favouring 3BHKs and 23% looking to buy 4BHKs. Just 22% NRIs  are now looking for 2BHKs. In the pre-Covid survey, at least 40% were eyeing 2BHKs.

Currently about 63% NRIs  prefer premium properties priced between INR 90 lakh – INR 1.5 Cr. In last year’s survey, 59% NRIs preferred luxury properties priced between INR 1.5 Cr to INR 2.5 Cr.

Many NRIs are now looking to shift back to India and actively use these homes. The current economic situation in many countries is uncertain because of the recessionary dynamics brought on by the Ukraine-Russia war, while the Indian economy is markedly better off.

NRIs Most Preferred Budget Range
Pre Covid (H1 2019) Covid (H1 2021) Post Covid (H1 2022)
INR 90 lakh to INR 1.5 Cr INR 1.5 Cr to INR 2.5 Cr INR 90 lakh to INR 1.5 Cr
55% 59% 63%

Source: ANAROCK Research

Many NRIs are now looking to shift back to India and actively use premium homes priced between Rs 90 lakh to Rs 1.5 crore and luxury properties priced between Rs 1.5 crore and Rs 2.5 crore. 

The current economic situation in many countries is uncetain because of the recession brought in by the Ukaraine-Russia war , while the Indian economy is better off. This is strengthening the home buying sentiment of NRIS.

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