Track2Realty Survey: The NRIs feel a piece of Indian property has no incentive in today’s time and it is more of a liability. In a global survey by Track2Realty they share their reservations, ranging from high cost to low appreciation and even lower rental returns.
Beyond the policy reforms, the survey also tried to assess why the Indian real estate is not attracting the NRIs as a priority sector investment instrument. After all, the property market had been in the past attracting these wealthy expat Indians despite of its opaque character.
The primary reason why the NRIs want to maintain a safe distance from the property market is high cost of property (40% NRIs); while lack of appreciation potential is another critical issue (38% NRIs); and low rental return (22%) is the third reason of this lack of interest.
“It just does not make sense to invest in a property market that is artificially inflated with no chance of short to medium term appreciation. The rental returns in India anyway are far too less, compared to the cost of borrowing. There are better avenues to put in your money, and be safer than the Indian real estate,” says Bhupender Singh in London.
These are the findings of a global online and off-line survey by Track2Realty. Track2Realty conducted this survey online, and then its global alliance partners also conducted on-ground sampling in many countries.
The NRIs from the US, UK, Middle East, South Africa, Canada, Australia, New Zealand, Malaysia, Singapore and Mauritius participated in the survey. They were given a mix of open-ended and close-ended questions to assess their investment choice in the Indian property market. The data was then collated by Track2Realty team to read the mood of the NRIs vis-à-vis their investment choice in the Indian property market.
Doesn’t weaker rupee make it a tempting opportunity for these NRIs? Contrary to the general belief, nearly three fourth of the respondents, as many as 72%, have no hope that the rupee will be anytime stronger in near future.
GST has further dampened the spirit of the NRIs and as many as 70% not only find it arbitrary to pay both the GST and Stamp Duty but also call it extremely difficult to calculate. It is no wonder that a large share of 82% NRIs who are exposed to living in tax free countries would prefer to invest there than in India.
“When I got a job in Singapore a property back home was the first thing in my mind. But after having settled here for close to a decade now I feel it was just an impulse. Even if I buy a house after a few years when I actually have to shift back to Hyderabad there won’t be much difference in the property prices. Indian currency will never be closer to what it used to be when US dollar was at around INR 40. Moreover, this confusion with GST would be over by then,” says Vimla Hemminge.
What is probably going against the investment decision is the fact that the NRIs are gradually coming out of the emotional connect to invest back home. More than half, 54% NRIs, completely ruled out investment borne out of emotional bonding.
Survey Highlights
High cost, low appreciation, and lower rental returns deter NRIs
72% maintain weaker rupee is not an opportunity
82% expat Indians feel GST is arbitrary in Indian real estate
More than half of NRIs don’t have emotional urge to buy Indian property
Post purchase maintenance and other logistical issues make NRI buyers apprehensive
62% NRIs maintain investment policies are restrictive in India
68% expat Indians demand to incentivize investment
The age profile of the NRIs also define their investment outlook in the Indian property market. The younger lot of NRIs, 78% to be precise, has absolutely no emotional glue to invest back home. It is only among the 50 plus age group where a substantial number of expat Indians, as many as 70%, are emotionally driven to invest for post retirement life.
“Who knows what would be my thought process in life after ten or more years when I actually take a decision on my future. It is absolutely no prudent decision to invest back home just due to compelling emotional urge. Investment in property is a serious financial decision and has a lot to do with your future plans,” says Jaswinder Singh in Canada.
There is another reason, finds the survey, why the NRIs are hesitant to invest in the property nowadays. It is the safety, security and maintenance of the house. With rental returns almost negligible, maintenance of the house is something that deters nearly six out of ten, as many as 58% NRIs; 28% are apprehensive of relatives grabbing the property; while the rest 14% have other reservations.
Any reforms that these NRIs wish to be implemented to make the Indian property attractive for them? Well, this is what defines the future road map where more than six out of ten, 62% NRIs, maintain that the rules for the NRIs investors are pretty restrictive.
A substantial number of them, 68% to be precise, even maintain that if the NRIs are incentivize to invest in the Indian property, including even agricultural land, then it would be attractive proposition for them.
In a nutshell, the Indian real estate sector is yet to reach a point where it becomes transparent and easy for the NRIs to invest in properties. The change of policies give hope of smoothening the roadblocks of the opaque system to regain the trust, it is a future road map as of now.
Story Update: October, 30, 2023
NRIs prefer to invest in home town
Post Covid the mindset and the outlook of the NRIs vis-à-vis the Indian property market has changed drastically. While earlier more and more NRIs were buying properties, now the active professionals are scouting for a piece of property. Naturally, there are not glued to their home towns for a comfortable retirement. And hence, the choices & concerns have also changed.
Many of these NRIs have future job uncertainties in foreign locations. They are now willing to invest in the Top Tier cities for future business and job opportunities. The periphery locations of the Top Tier cities are far greater in demand today. Some of the most sought after regions are Bangalore, MMR, Pune, Ahmedabad and NCR regions like Ghaziabad & Faridabad.
The focus of the young NRIs is on cheaper valuation of properties in the periphery locations and bigger houses with amenities. Even some of the Tier II cities that has connectivity with the upcoming industrial corridors like the Delhi Mumbai Industrial Corridor or Bengaluru Mumbai Economic Corridor are witness to the NRI traction.
Track2Realty is an independent media group managed by a consortium of journalists. Starting as the first e-newspaper in the Indian real estate sector in 2011, the group has today evolved as a think-tank on the sector with specialized research reports and rating & ranking. We are editorially independent and free from commercial bias and/or influenced by investors or shareholders. Our editorial team has no clash of interest in practicing high quality journalism that is free, frank & fearless.
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