Now is the time for NRIs to Invest in Real Estate in India
Many NRI typically only invest in equity and fixed income asset classes and often do not consider investing in Real Estate, especially Indian Real Estate. The major reasons for these are lack of knowledge, unavailability of local representation, and fear of dealing with the complexities involved in investing in Real Estate. However, this is now a prime opportunity for NRIs to invest in Indian Real Estate. Some of these reasons are mentioned below:
1. Covid-19 impact: Covid-19 has caused a temporary drop in Real Estate prices. However, with the removal of lockdown and the hope for the vaccine, the prices are steadily increasing back up. This is the right time to invest in Indian Real Estate in order to catch the upside of the price increase.
2. Home-coming & retirement opportunity: The pandemic has accelerated the importance for NRI of having a home back in India in case of an unexpected event like Covid-19. Traditionally NRIs invested in India due to a good return on investment, capital appreciation, and low rupee value. While these still remain important factors, the motivation for Real Estate investment has changed. With the increase of work from home initiatives by offices, demand for spacious homes and senior retirement facilities, especially on the outskirts of the city are in demand. According to a recent report, the realty search portal, NoBroker, has seen a 254% increase in inquiries for ready-to-move-in homes by the NRI community.
3. Volatility in markets: Post Covid-19 the volatility in stock markets has been unexpected and difficult to predict for even average investors. The volatility index as of 25 March 2021 is at 20.58. Values above 30 are indicative of unstable markets and for the majority of 2020, the volatility has been above 30. Investors and NRIs who want a safer option for their investments that still yield good returns have chosen Real Estate over other Asset classes. According to a Real Estate consumer survey, last year by NAREDCO as many as 35% of respondents preferred to invest in property over gold (28%), fixed deposits (22%), and stocks (16%).
4. Depreciation of Rupee against dollar: The Indian rupee has depreciated 2.83% in 2020 from Rs. 71.28 to Rs. 73.30 equalling 1 USD. The rupee is expected to stay at these levels for 2021 as well, making it cheaper for NRIs to invest in Indian Real Estate.
Apart from these reasons, it is important for NRIs to understand that the Indian government has significantly eased regulations and streamlined the process of investing in Indian Real Estate. The government has also introduced temporary incentives during Covid times last year to spur the Real Estate market.
There is no better time to invest in Real Estate than NOW.