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 business houses and individuals alike. This growing industry has now become the current favorite of NRIs who are 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 percent in 2014. Anuj Puri, Chairman and Country Head, 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 a few weeks after the announcement of the 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 percent over the last nine months“.
Sanjay Dutt, Executive Managing Director (South Asia), 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 long-term capital gains tax of 20 percent. NRIs and PIOs can also get a tax waiver, if the capital gains are invested in another property“.
The relaxation in FDI norms, a stable government and an investment-friendly market have all made people optimistic about the Indian real estate market. Prashant Solomon, a member of the governing council of Credai-NCR, says, “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“.
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 in? According to the report, Bangalore is the most-favored 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 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,“ he says.
The report further says that 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 high-end properties and commercial buildings, developers say. Puri says, “NRIs look for income-generating properties to invest in. Residential properties which can bring good rentals are in highest favour because of the af fordability factor and also because of the lower risk. NRIs who have the finances and risk appetite are also investing in leased-out ‘Grade A’ office spaces in primary cities“.
Source: Times Property, The Times of India, Bangalore