Demand from NRIs may give some Breathing Space Amidst COVID-Induced demand Destruction

By : 360 Realtors

11 May, 2021

As the COVID-induced 2nd wave has unfolded, real estate has also suffered a momentary decline in sales. It will take around ~ 2 months for the crisis to deescalate, and a similar time will be needed by the second largest industry in India to bounce back. Meanwhile, amidst the demand destruction, the NRIs are expected to offer some breathing space to the industry.

In recent years, Indian expats have emerged as a formidable force in Indian real estate. India boasts a large expat community of around 17 million spread across  Middle East, North America, Europe, and t Asia Pacific. Yet the involvement of the Indian diaspora in Indian real estate was limited. However, this started to reverse since the beginning of the last decade, when a host of policy overhauls have changed the rules of the game. Easier policies have been laid out that have made it convenient for the expats to invest in realty markets. NRIs can invest in any type of property without prior permission apart from agricultural lands. They can also avail home loans from Indian banks. Following the implementation of RERA, there has been an unprecedented amount of transparency in the Indian real estate, which has furthered the interest of NRI buyers in the market.


Rising investments from FY 14 to FY 21

In the past few years, NRI investments in Indian real estate have risen sharply. During FY 14 to FY 21, the total volume of NRI investments has climbed to USD 13.3 billion from USD 6 billion. Interestingly, during the last fiscal despite the fatigue in the market caused by the pandemic, investments inflow from the NRI quarters remained upbeat amounting to USD 13.3 billion and growing by 6.4% compared to FY 20.

NRI investments suffered from the shock in the first quarter, shrinking by 35%, when compared to the same period last year. However, soon the inflow recovered growing by 18%, 24%, and 22% respectively. The growth in the NRI market has been rooted in numerous factors including a dip in the value of rupee, growing interest towards tangible assets such as real estate, numerous attractive payment plans by developers, etc.

The momentum from the NRI quarters will continue to gain steam in the current time as attractive payment plans and devalued rupee will give impetus to NRI buyers in India. As per earlier estimates by 360 Realtors, NRI investments are expected to rise USD 14.9 billion in FY 22. (Although looking at the current situation, this might have to be corrected.)


Technology will bridge the gap

The rise in technology will also play an instrumental role in luring the NRI buyers. The last lockdown has taught realty players about the significance of technology and how it can help in business continuity in the face of a rising crisis. Taking the cue from the past developers and advisories are investing in new technologies and innovation such as digital launch, AR & VR, online walkthroughs, etc. This will also help in NRI investments, as now expats will be able to know and learn about various property options in detail despite physical distance. They can learn about the interiors, amenities, and payment plans at the convenience of their home and then make informed decisions.