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The contribution of Non-Resident Indians (NRIs) to the Indian real estate sector has witnessed a notable and steady growth over the past few years, said a new survey. In the fiscal year 2019-2020, NRIs were estimated to account for approximately 10% of the total investments in the Indian real estate market. However, in the ensuing years, this figure has seen an upward trajectory, and currently, NRIs contribute around 15% to the Indian real estate sector.
As per a survey conducted by NoBroker, this increase in NRI investment can be attributed to various factors, including their strong emotional connection with their home country, a desire to secure property for future use, and the favourable policies introduced by the Indian government to attract foreign investments. This trend underscores the continuing confidence of NRIs in the Indian real estate market as a promising avenue for long-term investments and asset diversification.
The report is based on a survey NoBroker conducted with over 12000 NRI customers.
Key highlights of the report;
Bengaluru And Mumbai Are the Chosen Destinations for NRI Buyers
With its cosmopolitan lifestyle, world-class educational institutions, and a thriving startup ecosystem, the rental yield of Bengaluru has gone up substantially, making it a good investment destination.
Similarly, Mumbai offers a dynamic real estate market driven by a mix of commercial, residential, and luxury properties. Its status as an international business hub, combined with its rich cultural heritage and vibrant lifestyle, makes it a compelling choice for NRIs looking for premium real estate investments for self-use as well as investment.
A significant 29% of respondents have crowned Bengaluru as their top pick for real estate investment, closely followed by Mumbai, which garnered the preference of 24% of NRI buyers.
82% Of NRI Buyers Have Indicated Lack of Information and Transparency as Major Challenges While Buying a Property in India
The fact that 82% of NRI buyers have identified lack of information and transparency as major challenges when navigating the Indian real estate market highlights the pressing need for improved accessibility and clarity in the property purchase process. They are often left with inadequate access to comprehensive property data, unclear regulations and lack of information on current prices.
Often, they have to depend on third parties to get all sorts of information that they require. This added dependency does not always result in the best investment decisions.
52% NRI Owners Have Said That They Want Property Management Services
The fact that 52% of NRI property owners express a desire for property management services underscores the growing demand for convenient and professional solutions to oversee their real estate assets.
Managing properties from abroad can be a complex and challenging task, and NRI owners are increasingly recognising the value of enlisting property management services to ensure their investments are well-maintained and financially optimised. These services often include tasks like finding a tenant, property inspection, rent collection, and administrative responsibilities, providing NRIs with peace of mind and a hassle-free approach to managing their properties efficiently and effortlessly.
Sentiment Analysis
The NRI Real Estate Survey 2023 showcases interesting insights about NRIs’ sentiment in investing in Indian real estate. India is a great destination for property investment right now, given high rental yields. However, the survey indicates that over 60% of NRI buyers are looking to purchase property for self-use, underlining their emotional connect, sense of security and lure of their homeland.
Depreciation of rupee and easy process of investment have contributed to this spike in interest from the NRI community.
43% of NRIs looking to purchase for their family living in India underline a broader shift in the real estate landscape, with the emergence of senior living projects gaining prominence as they offer comprehensive care, comfort, and a sense of community for their parents and grandparents. This dual focus on family security and well-being underlines the multifaceted nature of NRIs’ real estate investments, where each choice is driven not just by economic prudence but by emotional reasons as well.
Gated vs Non-Gated Societies
The survey by NoBroker reveals a notable trend, with over 54% of respondents expressing a strong inclination to invest in gated communities, emphasising the allure of safety, convenience, amenities, and community living.
Prior to the pandemic, the holiday home segment saw NRIs making up less than 11% of total sales. Over the past one year, the charm of holiday homes has also lured property buyers. With comprehensive property management services gaining ground, the demand for holiday homes will continue to be on the rise.
NRI Patterns and Preferences
In a very surprising turn of events, demand for 3BHK units has clearly outpaced demand for 2BHK units, with a striking 29% willing to opt for the former. What’s equally remarkable is that over 17% of the respondents are expressing a desire for even larger accommodations, specifically 4BHK and more extensive properties.
This segment of the NRI community values not only spaciousness but also the versatility and potential for multifunctional use that larger properties offer.
Ticket Size
The recent survey by NoBroker reveals that a whopping 40% of NRIs are aligning their real estate aspirations with budgets exceeding 1 crore. This upward trajectory in NRI budgets further underscores their role as significant stakeholders in India’s evolving real estate sector. Depreciating rupee and preference for projects with more amenities have expanded the ticket size.
Increasing Preference for Spacious Living
In a very surprising turn of events, demand for 3BHK units has clearly outpaced demand for 2BHK units, with a striking 29% willing to opt for the former. What’s equally remarkable is that over 17% of the respondents are expressing a desire for even larger accommodations, specifically 4BHK and more extensive properties. This segment of the NRI community values not only spaciousness but also the versatility and potential for multifunctional use that larger properties offer.
Digital Shift:
Increase in NRIs Seeking Property Investments via Real Estate Websites
The digital landscape is playing a significant role in shaping the investment choices of NRIs. A striking 46% of those surveyed are turning into real estate websites for searching property for investment in India.
Builder’s Credibility Reigns Supreme
Over 55% of respondents feel that the credibility of a builder is important while choosing a property for investment. Other factors that help NRIs in decision making include- Credibility of builder, Potential of price appreciation, price, locality and amenities.
Challenges Faced by NRI Property Owners
For NRIs, managing rental properties remotely can be a complex and challenging task. Many rely on their local family members or third parties. This process is time consuming and adds a lot of dependencies on third parties. As per NoBroker NRI survey, 63% NRI respondents have said that property management is a huge challenge. Out of this 52% of respondents have expressed a clear need for professional assistance in property management.
Among the reasons stated for the need of property management services, the convenience offered by these platforms topped the list. This data illustrates the pivotal role that professional property management plays in alleviating the burden of responsibilities of NRI property owners.
Navigating the Property Search Challenges
As per the survey conducted by NoBroker, it’s evident that obtaining accurate information and sound investment advice is a significant challenge for a vast majority, with over 82% of respondents acknowledging this concern.
The predominant challenge faced by NRI buyers is the dearth of sufficient information about a project or property. This highlights the need for greater transparency and comprehensive data when it comes to real estate listings and developments. Although a lot of information about builders, projects and localities is available online, property purchase is a huge decision and can be overwhelming especially when done remotely.
The survey revealed that 42% of respondents expressed concerns related to trust issues with brokers, emphasising the importance of establishing a trustworthy and reliable relationship between property seekers and property owners.
Nowadays, many real estate platforms assign a dedicated relationship manager to help with the process. Their scope of service includes shortlisting properties as per criteria, legal verification, price negotiation, legal paperwork, everything till the transaction is complete.
Outlook
Over the past year, there has been a remarkable increase in the interest and involvement of NRIs in the Indian real estate market. This surge can be attributed to several factors, such as the emotional connection that many NRIs have with their home country and the investment opportunities within the Indian real estate market.
Technology has really made it simpler to buy, sell, manage properties remotely whether it is for emotional connection or for investment purposes. It has made the access to information easier. Increased rental yields spell continuation of good times for the Indian real estate sector. Technology has not only removed information asymmetry but also made access to information on locality, projects, and builders easier.
The advent of technology means less reliance on third parties for purchase, sale or management of properties and this has boosted the NRI community’s confidence in the country’s housing sector. There is greater autonomy in decision making which was earlier subject to views and opinions of relatives, friends, or brokers. The process is free from personal biases and at the same time it’s more transparent.
More NRIs purchasing houses in India imply an increased demand for Comprehensive Property Management Services which include services such as finding tenants, inspection of property and rent collection.
56% of NRI customers said they preferred a dedicated Relationship Manager to ensure that their property is well taken care of. It takes away the hassle of finding new tenants, ensuring timely collection of rent, and if a tenant leaves without notice, the rent cycle is not disrupted. So, the entire management of property is done in the most seamless way possible.
It’s important to emphasise that real estate has consistently proven to be one of the best investment vehicles for achieving attractive returns. The growth in NRI residential sales, which has risen from 11% to 15%, in a matter of months, underscores this point. This demand is slated to reach 17% by the end of 2024.
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