Recent data compiled by various consulting firms and reported by HT Digital indicates Bengaluru retains its status as the foremost city for non-resident Indians (NRIs) interested in India’s residential real estate sector, particularly targeting affordable and mid-segment housing.
A variety of factors contribute to this appeal, including the city’s temperate climate, continually increasing property values, thriving cosmopolitan atmosphere, lucrative rental yields, and a vibrant commercial landscape.
While the majority of NRIs are motivated by investment opportunities, local domestic homebuyers significantly drive the IT capital's real estate sales.
Shalin Raina, Managing Director of Residential Services at Cushman & Wakefield, noted that NRI transactions in Bengaluru show a division of 35% for end-use and 65% for investment purposes.
Aligning with this, Prooptech unicorn NoBroker has reported a split of 60:40 favoring investment among its NRI clientele.
Both developers and consultants observed that these transactions typically represent the second or third properties that NRIs are adding to their investment portfolios. Sharad Sharma, Principal Partner and Sales Director at SquareYards.com, shared that NRIs are increasingly interested in senior living communities and plots, diversifying their investment strategies beyond conventional apartments.
From Where Exactly?
The highest demand stemmed from the US, UAE, and Singapore, particularly for real estate offerings from Bengaluru developers like Concorde and Brigade. NRIs typically form about 10% of their sales. Viswa Prathap Desu, COO of Residential at Brigade Group, mentioned, "These sales occur either in India when NRIs visit or abroad during our events, or through our international team’s outreach."
Saurabh Garg, co-founder and chief business officer at NoBroker, revealed that their NRI clients prefer reputable projects situated in high-demand rental zones, mostly near IT hubs.
Prominent locations favored by NRI investors include Kanakapura Road in the southern part of the city, Thanisandra in the north, alongside Whitefield and Sarjapur Road in East Bengaluru.
Current data from NoBroker suggests that property prices in these areas fluctuate between Rs 9,000 to Rs 12,000 per square foot.
Additionally, proximity to the airport, reputed Grade A developers, and reasonably priced properties in Hebbal and Devenahalli were also cited as appealing factors for NRIs. Over 55% of buyers tend to enroll in property management services concurrently with their purchases.
Attraction Factors for This Clientele?
Developers and property consultancy sources pointed out that, contrary to widespread belief, NRIs demonstrating interest in Bengaluru’s real estate market favor affordable and mid-range homes. Notably, nearly 69% of NRI transactions facilitated by SquareYards.com pertain to affordable and mid-range housing, encompassing apartments priced below Rs 1 crore. Ravi Shankar Singh, Managing Director of Residential Transaction Services at Colliers India, mentioned that 70% of the demand for units they manage lies within the Rs 1.5 to 2 crore bracket.
Desu from Brigade Group highlighted that NRIs working in clerical and administrative roles primarily fuel demand within these affordable and mid-market segments. Many opt to acquire 2BHK or compact 3BHK apartments, intending to either occupy them upon their return to India or utilize them for rental income. However, C-suite executives often gravitate towards villas, while tech professionals prefer 3BHK units, as noted by Kranti Alladi, Head of Sales and Marketing at Concorde.
Challenges Faced: Poor Infrastructure and Traffic Woes
Despite strong demand and high rental yields bolstering Bengaluru’s position in the real estate market, the city’s notorious traffic and infrastructure deficiencies serve as significant deterrents for NRI investors.
Rana articulated, "One of the primary deterrents for NRI property purchases in Bengaluru is traffic congestion, which has been consistently identified as a significant concern." Others echoed this sentiment, noting that the challenge of locating inventory within preferred areas also complicates property acquisition, as mentioned by Garg of NoBroker.
Growing National Interest from NRIs in Housing
This trend isn’t confined to Bengaluru; across North India, the situation is similar. Approximately 14% of DLF's total sales in the fiscal year 2022-2023 originated from NRI investors, with the GCC, USA, UK, and Singapore driving the company’s sales to surpass Rs 2,000 crore. Based in Gurgaon, DLF anticipates a 20% increase in the upcoming fiscal year.
A notable 25% of sales, or about Rs 1,800 crore, for their latest venture DLF Privana South, stemmed from NRI markets, with significant contributions from the US, Canada, Southeast Asia, and the GCC. Aakash Ohri, Joint Managing Director and Chief Business Officer of DLF Home Developers Ltd., conveyed to Hindustan Times Digital from Africa that there is also growing interest from regions like Tanzania and Kenya.