The real estate industry currently holds immense potential and is worth approximately $477 billion, with a projected growth of one trillion dollars by 2030. Owing to these growth prospects, the industry has garnered a surging interest, particularly from non-resident Indians in recent years. NoBroker’s report claims a further upward trend as the NRI investments’ share in Indian real estate rose from 10% in 2019 to 15% by 2023, and this figure will likely reach 20% by 2025. Besides lucrative factors like economic growth and infrastructure expansion, the property market’s potential high returns on various investment options have transformed India into a promising investment destination for NRIs.
Key investment options for NRIs
The Indian real estate sector offers NRIs with a multitude of avenues, each having its own benefits:
Residential properties
The rising demand for residential properties, especially in metropolitan cities and growing urban regions, shields this investment option from losses. Additionally, NRIs can generate rental income while benefiting from long-term property appreciation. Around 80% of Indian developers anticipate a rise in the number of homes purchased by non-resident Indians (NRIs) in 2024, owing to a favourable investment landscape, regulations, and potential for gains. A significant portion of NRI buyers are also seeking out premium properties. Approximately 26% of these buyers are interested in homes that exceed INR 1 crore budget, while gated communities attract 54% for ensuring security and comfort.
Office spaces
About 52% of NRIs consider commercial real estate investments, including corporate office spaces, for portfolio diversification as India becomes a global hub for IT and multinational corporations. This sector ensures high rental yields and capitalises on the growing corporate presence in Bangalore, Hyderabad, and Gurgaon.
Retail outlets
With the retail market’s promising growth and the development of the e-commerce and organised retail sectors, investing in a retail space can offset steady returns. NRIs can rent it out as an income source or be employed for business purposes. Looking forward, India’s growing retail requirements demand approximately 55 million square feet of Grade A mall space to keep pace with changing consumer behaviours. This demand can be attributed to the increasing market confidence, internet usage, and the foray of international retailers.
Warehouses
The recent boom in e-commerce and the push for efficient supply chains have accelerated the demand for logistics and warehousing spaces. By 2027, the Indian warehousing sector is anticipated to hit USD 34.99 billion, with a compound annual growth rate (CAGR) of 15.64% from 2022. Therefore, NRIs can expect solid returns by investing in warehousing as the logistics sector continues to expand.
Resort homes as the new age investment
Investing in resort homes has been an upward trend among NRI investors. As a relatively new yet highly profitable option, these properties offer significant benefits that make them appealing to investors seeking hassle-free and greater return avenues.
Steady rental income
One of the primary draws of resort homes is the potential for rental income. NRIs can lease their resort properties to vacationers, generating steady income throughout the year and making it a reliable investment.
Property appreciation
Resort homes are typically located in areas close to nature, making them prime candidates for property appreciation. As tourism in these areas grows, so does the value of these properties. NRIs can benefit from the rising market prices, thereby increasing the overall investment return over time.
Hassle-free maintenance
Most resort homes are part of managed communities that take care of property maintenance, ensuring hassle-free ownership. For NRIs who live abroad and may not have the time or resources to manage their property regularly, this feature provides peace of mind, knowing that the property will remain in top condition without requiring constant oversight.
A quality vacation spot
Another advantage of resort home investments is using the property as a personal vacation retreat. NRIs can enjoy quality time with family and friends whenever they visit India, combining the investment’s financial benefits with the convenience of having a luxurious holiday destination.
Secure gated communities
Resort homes are often located in secure, gated communities that offer a high level of security and privacy. This ensures that the investment is well-protected and provides an additional layer of trust and security when dealing with property transactions from abroad.
Why is 2023-2025 an ideal time for NRI real estate investments?
The period from 2023 to 2025 presents a prime opportunity for NRIs to invest in Indian real estate. The market, valued at $0.33 trillion, is expected to reach $1.04 trillion by 2029, reflecting strong growth potential. As urbanisation and infrastructure projects expand, demand for properties across residential, commercial, and resort sectors is increasing. For NRIs, this period offers a chance to tap into a rapidly evolving market and gain long-term value from India’s dynamic real estate sector.
