The NRI surge

Online launches, virtual property exhibitions and digital transactions are bridging the gap between real estate developers and expat buyers

Backed by conducive policies by Indian regulatory bodies, NRI (Non-resident Indian) investments in the country have gone from strength to strength over the last few years. In FY21, NRIs have invested over $13.4 billion in the Indian real estate market, exhibiting an investment volume increase of 6.4% compared to FY20, despite the pandemic and its aftermath.

2021’s first quarter saw real estate investment volumes dropping by a whopping 35% due to the lack of economic activity imposed by global lockdowns, creating a sense of panic within the industry. However, in Q2, the domain demonstrated its resilience by attracting significant investments from the NRI community through a combination of substantial price reductions and innovative marketing strategies.

By the end of Q2, NRI investments rose by a staggering 18%. In addition to suitable government policies, lowered rates, and favourable currency movement, technology has been instrumental in enabling NRIs to identify and purchase highly sought-after real estate properties in India, despite being unable to visit them in person. Furthermore, revolutionary realtors have been successful in utilising advanced internet-driven technology to organise highly-interactive virtual tours, digital layout inspections, and offer hassle-free digital paperwork processes.

A novel business model that is favoured by NRIs, the ResiTel model, revolves around the concept of resort suite ownership. These resort units are typically part of a large resort complex located at highly popular vacation destinations.

Resort suite owners have the freedom of using the unit as their exclusive vacation home, and incorporating it into the resort’s inventory during the remainder of the year, so that the suite unit becomes available as short-term accommodation to the patrons of the resort. Besides enjoying a steady stream of income in the form of monthly rent, owners are also liberated from the hassle of expending resources for the upkeep of the property, since the resort’s management is obligated to handle everything from marketing and booking expenses to housekeeping.

The Gulf Cooperation Council (GCC) is a mainstay for NRI real estate investments in India, contributing to over 40% of the total foreign investments in the country. In addition to the influential GCC community, expat communities from diverse geographies show considerable interest in Indian real estate, with the U.S. investing 17%, followed by Singapore at 12%. Canada, the U.K., Germany, South Africa, and Kenya are some of the other emerging markets for NRI investment.

Since FY14, when NRI investments in India were at $6 billion, real estate has witnessed a steep incline year on year. With the industry growing rapidly at a CAGR (Compound Annual Growth Rate) of 12%, it is estimated that such investments will reach the $15 billion mark by FY223.