Simplified Taxes, Indexation Benefits Prompting NRIs To Invest In India’s Real Estate Sector

Non-resident Indians (NRIs) are investing big in India’s booming real estate sector, especially in luxury properties as sales have risen 15 per cent, fuelled by a voracious appetite for upscale homes. NRI residential sales has increased from 11 per cent to 15 per cent in a short span, a sign of growing confidence in India’s real estate market, according to a recent report by NoBroker. It said the sales are forecast to hit 20 per cent by 2025.

Over the past three years, the number of NRIs investing in Indian homes has notably risen, attributed to factors like simplified tax regimes, indexation benefits, and transparent regulations, making India an attractive investment hub for NRIs.

Developers are observing a surge in demand from non-resident Indian (NRI) investors, especially in the luxury property segment. In the fiscal year 2022-2023, leading real estate developer DLF reported sales surpassing Rs 2,000 crore from NRI investors, accounting for about 14 per cent of the total sales volume.

Significant markets fueling this uptick included the Gulf Cooperation Council (GCC), US, UK, and Singapore. DLF’s recent venture, DLF Privana South, experienced approximately 25 per cent of its sales originating from NRI markets, with notable contributions from the US-Canada, Southeast Asia, and the GCC regions. The project garnered interest from diverse geographic locations, including Africa, notably Tanzania and Kenya.

Reflecting on this trend, Aakash Ohri, joint managing director and chief business officer of DLF Ltd, said, “For the NRI investors, Indian real estate has always been a market with enormous opportunities. Residential real estate provides the NRI community with a unique opportunity to convert their hard-earned income into lucrative investment opportunities in India. In the past two years, we have seen an increase in the number of NRIs looking to buy a home in India, and pent-up demand has begun to emerge.”

He added that factors including a simplified taxation regime and indexation benefits for properties held in India encourage NRI buyers to park their surplus money in India. Other major decision drivers are factors like lower home loan interest, favourable currency movement, digitisation of procedures, and transparent regulations.

Another developer TARC Limited headquartered in New Delhi said that they have witnessed interest from NRIs for its offerings from regions like Dubai, Abu Dhabi, London, Singapore, Hong Kong, and the United States.

Amar Sarin, MD & CEO of TARC, said, “The engagement of NRIs with our luxury developments goes beyond mere investment; it signifies a profound connection to their cultural heritage. Since our launch in October 2022, nearly 20 per cent of our contributions have stemmed from the NRI sector. This statistic clearly indicates the trust and assurance this community invests in TARC’s dedication to crafting superior and innovative real estate solutions.”

Vivek Singhal, CEO of Smartworld Developers, said the Indian real estate sector currently offers a compelling investment opportunity characterised by appealing rental yields, long-term capital appreciation, and affordability. In recent years, there has been a significant increase in investments across various real estate asset classes, driven by the growing demand for luxury housing.

“In the current market landscape, discerning homeowners actively seek properties that provide spacious living areas, ample natural light, and outdoor spaces for relaxation and recreation. These features greatly enhance the overall living experience. High-net-worth individuals (HNIs) and non-resident Indians (NRIs), unaffected by economic variables such as interest rate fluctuations, also play a pivotal role in fueling the demand for high-end residences. Resultantly India is being perceived as appealing and promising destination for real estate investments both by domestic and NRI diaspora,” he added.

As the real estate market continues to evolve, NRI investors play a key role in shaping the industry’s trajectory. Their confidence in the Indian market is a positive reflection on the country’s economic endurance and resilience and the overall appeal of its real estate products. With a conducive atmosphere and rising interest, the collaboration between NRIs and India’s real estate sector is set to see continuing progress and success.