The way the Indian realty sector has emerged and developed in the recent past is exemplary. This sunshine sector is now becoming one of the most preferred investment options for many, including businesses and individuals alike. This growing industry has now become the current favourite of NRIs who are very eagerly investing in properties in their homeland.
According to a recent report by JLL India and Associated Chambers of Commerce and Industry of India (Assocham), NRI investments in Indian realty may rise by 35% in 2014. Anuj Puri, chairman & country head of JLL India, says: "This is because of the election of a strong and proactive government into power and also the encouraging Budget that followed. This has reflected in the stock market, with the Bombay Stock Exchange Sensex hitting levels of 25,000 within few weeks after announcement of election results. The BSE Realty Index, among India's most poorly performing ever since the global financial crisis (GFC) hit, also gained more than 74% over the last nine months."
Sanjay Dutt, executive managing director (South Asia) of Cushman & Wakefield, India, says: "Favourable demographics and increasing urbanization bode well for the residential realty sector. Indian laws permit NRIs and PIOs to invest in commercial and residential segments. Indian laws also allow repatriation of profits arising from sale of property after paying a longterm Capital Gains tax of 20%; NRIs and PIOs can also get a tax waiver, if the capital gains are re-invested in another property ."
The relaxation in FDI norms, a stable government and an investment-friendly market have all made people very optimistic about the Indian real estate market, Prashant Solomon, managing director of Chintels India and member of the governing council of Credai-NCR, said. "Investors are looking forward to the new government's initiatives towards implementation of infrastructure projects, rationalization of the tax regime with respect to securities as well as commodities transaction tax, along with other reforms," Solomon said.
There is certainly an upsurge in the trend and it can be expected to rise further in the future.So, what are the most preferred destinations in India that NRIs are more willing to invest? According to the report, Bangalore was the most favoured property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi, and Dehradun.
NRIs tend to buy Indian property either for self use or for investment, Puri of JLL says.
"In the first instance, they tend to buy in their native cities and towns, and in the second instance in cities that show the most growth potential in terms of job creation and the ensuing demand for properties. Some of the most noteworthy cities in both categories are Bangalore, Chennai, Pune, Coimbatore, Kochi, Hyderabad, and the Delhi NCR," Puri said.
The report further says that the enquiries are primarily coming from NRIs residing in the UAE, the US, Singapore, Australia, the UK, Canada, and South Africa. Also, This year, demand is more for the high-end properties and commercial buildings, developers say . Puri says: "NRIs look for income-generating properties to invest, within their budget constraints. Residential properties which can bring good rentals are in highest favour because of the affordability factor and also because of the lower risk. NRIs who have financial clout and risk appetite are also investing into leased-out 'Grade A' office spaces in primary cities."
Ashish Jerath, VP sales, NCR, Emaar MGF Land Ltd, says: "Buyers understand that commercial realty is one area that has not had price appreciation as seen in residential realty. With commercial real estate available at rates lower than residential properties, it is clearly underpriced and has a healthy room to catch up in price appreciation in the near future."