NRIs are contributing to a real estate recovery

We have been reporting on how the real estate has been faring. It seems that the NRI segment has taken the lead. So, unlike other sectors, many NRIs seem to have seen the pandemic as an opportunity to invest. Many are considering moving back to India. The bottom line, however, seems to be that real estate could continue to recover on a nice tailwind that NRIs are helping to create.

Historically, NRIs have been a coveted lot for real estate. In 1992, the government eased norms for the flow of NRI money into Indian real estate. Many cities benefited from this decision. Another boom was experienced in the early part of the 2000s and then again all of last decade. But thanks to demonetisation, GST, and RERA, a slowdown began that has not completely picked back up. The fourth whammy has been the Covid-19 pandemic-driven economic crisis. Experts see a recovery by next year.

Non-resident Indians (NRIs) are known for their affinity to ?back home? in India, and have been topping world rankings on transferring money they earn abroad to relatives or owned bank accounts in India. With a 31 million-strong diaspora, India is the world?s top recipient of transfer, having received $83 billion in 2019. India is followed by China, Mexico, the Philippines, and Egypt.

But in 2020, many migrants returned home, and remittances to the Asia-Pacific region was expected to drop 12%, according to Fitch Ratings in September. India fared better, with only a 9% plunge.

However, home buying has a different story to tell. Real estate, both by its nature as a safety net for families and as a strategy of sorts, has seen a recovery from a beleaguered economy last year that is leaps and bounds better than other sectors. State governments, too, took steps proactively to cut premiums, taxes, and in other ways incentivise property buying.

That strategy seems to have worked. Demand for real estate has continuously risen in parallel, experts say, to the insecurity that Covid-19 has dragged in with it. Home loan interest rates are under 7%.

There has been a 2.54 times (254%) increase in inquiries for ready-to-move homes from NRIs since March 2020. But even more so, people seem ready to park their money in real estate that is not ready to move in. South Indian cities?Bengaluru, Hyderabad, Kochi, Chennai, among others?continue to perform well.

Experts also say technology has had a role to play. More developers have swiftly taken to virtual walk-throughs and enabled buyers to digitally or virtually inspect, process papers, and even make the purchase. Smarter, more eco-friendly designs have spurted last year, making homes more appealing to an international market.

Repatriation of income from rental income or sale proceeds from a property to the country of residence for NRIs and PIOs has been eased. This and other recent regulatory policies must also give buyers confidence.

For the Indian diaspora living in countries where citizenship is not available, such as most countries in the Middle East, India continues to be home, making property a good segue for people to secure their immediate or future return at a time when there is a combination of factors that seems particularly favourable, provided nothing has changed for a person in terms of income.

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