Having an own house back in India is almost on every NRI’s checklist. Be it for investment purpose or a long-sighted housing solution, real estate has always been a favorite investment asset class for NRIs.
2015 saw a slump in real estate in India. Before that, the return on investment in residential property was extremely rewarding for NRIs. The slowdown bought a shift in the interest of wealthy NRIs who started parking funds in commercial properties as they promise far higher yields as compared to residential ones.
Things started looking up in 2018 again as the real estate picked up pace post the effects of note-ban, the RERA, and GST. Of late, more and more NRIs are buying homes in India mainly for rental income.
As per industry experts, NRIs with higher purchasing power are lapping up housing segment, mainly luxury homes along with affordable homes, as they offer better rental income and capital appreciation.
Owing to rental income and better long-term appreciation, affordable housing is constantly gaining popularity among NRI investors. As per Anarock Property Consultants, affordable housing is expected to give returns of 8-10 percent for NRIs followed by 6-8 percent for mid-segment, 3-5 percent for luxury and 2-3 percent for ultra-luxury properties, Money Control reported.
According to Anarock Property Consultants CEO-GCC Shajai Jacob, NRIs, mostly end-users are looking at buying now and also putting them on rent in the beginning and some years down the line, if they decide to return to India, they could stay in them.
In fact, investment by NRIs in the domestic property market is expected to touch $180 billion by 2020.
Assocham VP Niranjan Hiranandani opines that due to the demand side interventions in the recent like permission to divide capital gains from the sale of a property to be invested in two properties (instead of one as allowed earlier), increased limit of rental TDS deduction, second self-occupied home to be exempted from notional rental income and other such changes, both the NRI investor, as well as end user, will be more attracted to the market.