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I7: Real Estate Trends

Updated Insights for NRI Investments in Indian Real Estate

Key Markets

NRIs typically invest in their home markets first, followed by key markets where reputed developers, particularly corporate developers, are active. These key markets include:

  • National Capital Region (NCR)

  • Mumbai

  • Pune

  • Bengaluru

  • Tier-II and Tier-III cities

Preferred Segments

  • Luxury: ₹1.5-2.5 crore

  • Ultra-Luxury: More than ₹2.5 crore

Property Management and Startups

An increasing number of NRIs are turning to startups specializing in home aggregation and property management to manage their real estate properties in India. These startups offer higher rentals and better property management compared to traditional brokers. Notable startups include:

  • NestAway

  • Quikr Homes

  • NoBroker

Largest NRI Investor Base

  • USA and Canada

  • UK

  • Dubai

  • Singapore

Investment Considerations

  • Infrequent Stays: NRIs can consider renting, staying in a hotel, or using a serviced apartment if the property is meant for infrequent stays.

  • Monitoring: Select projects from reputed builders and have a local contact to check progress and visit the property.

  • Legal System: Review documents with advocates and banks. Taking a small loan from a bank can ensure all processes are in order.

Currency Exchange Impact

  • Exchange Rate Fluctuations: The long-term trend suggests the Dollar will appreciate and the Rupee will fall. Consider exchange-related losses when calculating property appreciation and rentals.

Transaction Costs

  • Registration and Broker Charges: Factor in 6% for registration and 2% for broker charges on purchase, and 2% broker charges on sale. Total cost is around 10% on the buy-sell cycle.

  • TDS Deduction: 20% TDS on capital gain is mandatory for NRI property sales. Buyers must deduct TDS, and a tax advisor/CA is recommended for guidance.

Rental Challenges

  • High-Value Properties: NRI properties are often high-value, making them less accessible for many renters. This can lead to renting at lower rates and maintenance costs, regardless of occupancy.

Investment in Plots

  • Risk Factors: Investing in vacant plots is risky unless they are part of a larger, reputable development. Apartments, villas, or plots from reputed developers/builders are safer options.

Ease of Doing Business

  • Tax Clearance: Obtaining a tax clearance certificate or dealing with high TDS when selling requires navigating the IT office. Converting from a resident account to NRE for repatriation is also necessary.

Latest Trends

  • Smart Homes: Growing demand for smart homes with connectivity and convenience.

  • Co-Living Spaces: Rise of co-living spaces catering to young professionals and students.

  • Sustainable Developments: Increasing focus on eco-friendly and sustainable living options.

  • Proptech Innovations: Adoption of technology in property management and transactions.

  • Commercial Real Estate Growth: Expansion in commercial real estate, especially in IT hubs.

These updated insights provide a comprehensive overview of the current trends and considerations for NRI investments in Indian real estate.

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