NRI investment patterns become realistic

Rather than investing in the most luxurious properties, NRIs are now putting their money in smaller projects that they can sell quickly or use on their own. We examine the reasons behind this changing trend

Alka Rajpurohit, a non-resident Indian (NRI) from Dubai, wanted to sell her luxury apartment in Gurgaon and instead, buy a premium apartment in Noida. Rajpurohit’s decision, reflects the changing dynamics of NRIs’ investments in Indian property – from being investors and speculators, to future end-user buyers.

Similarly, Arjun Parihar, another NRI from Boston who is now returning to India, has already invested in a mid-segment apartment in Ghaziabad. “People think that we make a lot of disposable money. However, life is not that easy for us in foreign countries. If I invest in a plush luxurious apartment, then, my finances will not allow me to start a business here. What will I do with a luxury apartment but no source of livelihood?” Parihar explains.

As compared to ultra-luxury properties or saturated locations, mid-segment apartments in relatively affordable markets, seem to be witnessing high demand.

According to data available with Track2Realty, Malayalees and other south Indian NRIs are now investing in Kochi and Coimbatore, rather than Bengaluru or Chennai. Similarly, Gujarati NRIs are investing in Ahmedabad and Vadodara, rather than Mumbai, while Mumbai-born NRIs are investing in Pune and Nashik. North Indian NRIs are investing in properties in Noida and Ghaziabad, instead of Gurgaon.

 

What NRIs want

Kaizad Hateria, brand custodian and chief customer delight officer, Rustomjee Group, says that nowadays, in a majority of the cases, the clients who buy luxury and super-luxury properties are end-users. However, every end-user, may not have the budget to invest in luxury or super-luxury developments.

“The self-employed segment of NRIs, prefer to have an investment portfolio of different projects, instead of putting their money in large developments. They divide their money among various small projects, which enables them to sell easily if they want to, or earn good rental from their various investments,” Hateria elaborates.

Manju Yagnik, vice-chairperson of the Nahar Group, points out that in the prevalent market conditions, NRIs are avoiding big-ticket projects. NRIs are investing in properties worth Rs 60 lakhs to Rs 2 crores, depending on their social strata, as this is an attractive and safe option. Most of the affordable luxury housing projects, fall in this price bracket in the metro cities.

“NRIs also like to keep the option of exiting open, based on the movement of the global economy. A project with a large ticket size, takes longer time to liquidate. Over the years, NRIs have largely invested in properties across metropolitan cities, as it provides them with the lifestyle that they are used, in addition to appreciation and healthy returns,” says Yagnik.

See also: NRI investment in Indian realty hit by lack of ‘trusted information’

 

Ground realities

Does it mean that the luxury and ultra-luxury properties, will no longer attract the NRIs? While the analysts’ opinions remain divided, everyone agrees that the days of speculative investments, may be over.

A survey conducted by Pravasi Bandhu Welfare Trust, a Dubai-based non-governmental organisation, working to improve the lives of Indian workers in Gulf Cooperation Council (GCC) countries, finds that a whopping 95% of NRIs in the Gulf do not save anything and return empty handed to India, even after working for a decade. A majority of them fail to save sufficient money, due to low wages and high cost of living. The study also found that only 10% of Indian workers in GCC nations, live with families. Consequently, the demand for housing from NRIs, now reflects ground realities.

This augurs well for the housing market, as it may indicate the end of speculative buying and the evolution of an end-user-driven market.

 

NRI preferences in home buying

  • 95% NRIs are employees and wage earners and cannot afford luxury property in India.
  • Rich NRIs have burnt their fingers or have learnt from the bitter experiences of their peers and hence, avoid luxury properties.
  • Small-ticket investments, provide easier options for exit and better rental returns.
  • Insecurity in the global job market, is forcing NRIs to be realistic in their housing investments, back home.

(The writer is CEO, Track2Realty)

 

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