Inside NRI Portfolios: Exploring India’s Luxury Property Market
Over the past decade, the Indian real estate industry has witnessed increasing investment by NRIs, with reports stating that they will make up over 20% of investors in the industry. This would be a sharp increase from the reported 10% this segment made up for in 2019–20. Today, this figure has reached 15%, as per the latest reports from the leading PropTech company.
While this group has invested in a diverse array of assets, it is residential real estate that has garnered the most interest, with investment growing from 11% to 15% in 2023. Interestingly, it is the luxury residential real estate sector that has inspired the most interest from NRIs and HNIs. Key interest in this sector has mostly spurred from the United States of America, the United Kingdom, Singapore, and Gulf Cooperation Council countries.
This surge is influenced chiefly by increased rental yields, the depreciating Indian rupee against major foreign currencies, a liberal investment ecosystem with favourable government policies, and a staunch Indian real estate industry, amongst many other factors. Let us study in detail some of the key findings the report has revealed about these NRI investments to get a deeper insight into their investing habits.
- IT Capital and Finance Capital as the Leading Investment Destination
The report has revealed Bangalore and Mumbai as the most sought-after investment destinations by NRIs and HNIs. This is due to an assortment of factors, such as the flourishing infrastructure, both social and transit, the presence of attractive employment opportunities due to a thriving startup ecosystem, and the extensive penetration of the largest multinational corporations in the world.
In addition to this, the housing market in the top 7 cities in India is ranked as one of the top ten appreciating residential real estate markets in the world, ensuring a great return on investment for the NRIs. Based on the report, Bangalore emerged as the top pick, with 29% of NRI investors, followed by Mumbai with 24% of NRI investors.
- Spacious Homes Fueling the Demand Amongst NRIs
In recent years, demand for spacious homes with luxurious amenities and state-of-the-art infrastructure has been fast gaining traction. This is due to a wide variety of reasons, such as the switch to hybrid or remote work modes, rising per capita income, elevated aspirations of the middle class, etc. It is no wonder that this inclination towards luxurious and spacious living spaces has trickled into the NRI segment as well.
Indeed, according to the report’s findings, demand for expansive 3 BHK living space exceeded demand for 1 and 2 BHK units in 2023, reflecting demand for commodious living quarters. The report also disclosed surging demand for second homes or vacation homes in India.
- Burgeoning Interest in High-value Investments
As mentioned above, there has been a noticeable uptick in investment in the luxury and ultra-luxury segments by NRIs. The report reveals that a notable 2% of NRI investors are inclined to invest in properties exceeding Rs. 1 crore. Furthermore, 40% of NRIs stated that they are interested in buying properties exceeding Rs 1 crore, showcasing a strong desire for luxury real estate avenues. Another trend noticed in the survey is a mounting predisposition towards investing in gated townships owing to safety and convenience reasons, with 54% of them reporting a strong inclination towards it.
The increasing NRI investments in India’s luxury property market signal a significant shift in global real estate dynamics. Bangalore and Mumbai emerge as top destinations due to robust infrastructure and economic opportunities. The demand for spacious, high-value properties reflects changing lifestyle preferences among NRIs. This trend underscores the resilience and attractiveness of the Indian real estate sector, offering promising avenues for lucrative investments and strategic growth opportunities.
