A recent survey among NRIs revealed that around 52 per cent of them are considering investing in commercial real estate (CRE) to diversify their portfolio in the Indian real estate segment. The Neo-Realty Survey by MYRE Capital also stated that the real estate segment in India is demonstrating an upward trajectory with a projected growth rate of 9.2 per cent CAGR during 2023-28.
Harpal Singh Chawla, director of Spaze Group, said, “The emergence of fractional ownership (FO) in the country has further boosted this trend. NRIs no longer have to inject Rs 5-10 crore to purchase a commercial property. Under FO, a set of investors can pool their funds as minimum as Rs 25 lakh to purchase a Grade A commercial property and enjoy higher returns making investments in this segment lucrative.”
As per the survey, around 18 per cent of NRIs are strongly inclined towards investing in the commercial realty segment. In comparison, 9 per cent prefer to invest in the residential segment for a diversified investment portfolio.
Rajesh K Saraf, MD of Axiom Landbase, said, “Another important factor making the realty investment lucrative for NRIs is the favourable rupee-dollar ratio. Another incentive for NRIs to invest in real estate is their attachment to their homeland. While high yield is an important factor, they are also investing in property of their country because they want to provide a comfortable life to their family through fulfilling home investments with an assurance of high ROIs in the future as well.”
The demand for investing in CRE is primarily driven by acquiring better returns, as 34 per cent of NRIs see this as a big reason to invest in CRE. In addition, around 48 per cent of NRIs believe high convenience, including the seamless process of investing and finding suitable properties when they invest in CRE.
The survey report also showed that 18 per cent of NRIs consider property management facilities like finding tenants and upkeep of the property as the biggest reason to invest in commercial real estate over the residential segment.
Manoj Gaur, president of Credai NCR and CMD of Gaurs Group, said, “The proliferation of technologies has also aided this process. Most interactions happen on the digital platform, and shortlisting properties have become easy. As a result, physical visits are down to a bare minimum, thus saving time and money. Besides, commercial real estate with its significant ROI has made it one of NRIs favorite investment instrument. Also RERA Act 2016 has acted as a strong enabler for investors to bestow the trust in real estate as a asset class.”
The average investment size for an NRI in the commercial segment is Rs 38 lakh, higher than resident investors.
Deepak Kapoor, director of Gulshan Group, said, “As an asset class, India’s commercial office property offers a profitable alternative for NRIs who want to maximize returns and generate a fixed income. Moreover, the average rental yield of 8-11 per cent in the case of commercial property is higher than the prevalent yield from residential property (1.5-3.5 per cent).”
He added that besides, the government’s and the RBI’s positive policy initiatives have also played a crucial role in the surge in NRI investment in the segment. The government’s reforms such as RERA and GST along with the simplification of the taxation regime have also encouraged NRIs to invest in the commercial office properties.
The cities that topped the list for NRI investors included Bengaluru, Mumbai, and Pune. However, of late, regional hotspots like Ahmedabad, Lucknow, Chandigarh, Kochi, and Indore also feature high on the radars of NRI investors.
The Indian real estate sector is demonstrating an upward trajectory. With the rupee-dollar ratio favourable towards investing in India, NRIs are taking advantage of this opportunity to invest in commercial real estate. The government’s policy initiatives, simplified taxation regime, and proliferation of digital technologies have made it easier for NRIs to invest in India. With a high projected growth rate, the Indian real estate sector presents a significant opportunity for NRIs to diversify their investment portfolio and acquire better returns.
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