By Manju Yagnik
The growth juggernaut will continue in FY 23. Over the last 3-4 years, real estate has largely been driven by end-users. However, the tide is turning and it is once again on the radar of investors. If one has a mid-to-long-term investing perspective, real estate is a good choice. It also has a high aspirational value. In the form of monthly rentals, real estate can also provide a steady stream of revenue. In India, both major and small investors are rediscovering the benefits of real estate investing, especially at a time when cautious investment is still a part of the language.
The real estate sector has proven to be an appealing asset class with higher relative returns, attracting both locals and NRIs equally. Today’s NRI buyers seek a well-connected living ecosystem with a diverse range of options for living, working and playing in style. Residential real estate has always been the preferred asset category for non-resident Indians. NRIs have gradually returned to the real estate market in recent months, boosting sales of luxury homes and other segments. The desire is now mostly for personal usage. Global Indians contribute significantly to India’s foreign reserves through remittances and investments in various Indian asset classes, notably real estate.
Positive impact on the Economy
The depreciating rupee is an opportunity for NRIs to invest in residential real estate in India.This is also helping our country economically. Mumbai is India’s greatest city for commercial real estate investment, with returns of 12-19 percent expected over the next five years. Bengaluru and Delhi-National Capital Region (NCR) are the next top cities. After agriculture, real estate is India’s second major source of employment. It contributes to roughly 10% of the country’s GDP and is expected to increase at a rate of 30% over the next decade. In India, the demand for urban housing is expected to be 4.2 million units in the top eight cities. The National Capital Region will have the largest demand, accounting for roughly 24-26 percent of overall demand.
Influencing the rise of luxury homes
Global buyers are influencing the rise of luxury homes in various cities in India. The growing popularity of working from home has increased the desire for larger homes. NRIs appreciate open, green places with modern amenities including temperature-controlled pools and electric vehicle chargers, contactless entry, electrical equipment connected to a mobile phone, closeness to health and wellness centers, malls/supermarkets, connectivity to airports and safety. Furthermore, ready-to-move-in residences with opulent designer interiors and projects nearing completion are available. According to the latest CII-ANAROCK Consumer Sentiment Survey, “Cheap housing is the lowest priority for the first time, with more than 34% of respondent home seekers focusing on properties valued between INR 90 lakh and INR 2.5 cr.” The majority of NRI respondents preferred luxury properties with a price range of INR 1.5-2.5 crore. Location, social infrastructure, in-development amenities, and the size of one’s home were significant contributors towards the price brackets that we see gaining traction.
The Indian real estate sector bore the weight of the COVID-19 pandemic, and many projected a long period of hardship, particularly for the luxury segment. However, when customers began to gravitate towards luxury homes due to the healthy lifestyle they offer, things began to change, and luxury has now been redefined as a way of living.
Several state governments reduced stamp duty and the interest rate on home loans to nearly low as well as simplified investment regulations and the rupee’s devaluation, all of which encouraged people to invest in real estate, resulting in increasing demand.
Manju Yagnik, is Vice-Chairperson, Nahar Group, and Sr. VP NAREDCO (Maharashtra). Views expressed in the article belong to the author and do not represent that of SquareFeatIndia.
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