NRI Investment in Real Estate Boosted by Loan Cap Removal
The desire of Non-Resident Indians (NRIs) to invest more in real estate properties has received a further boost with the removal of the cap on loans. Recent reports indicate that nearly 90% of NRIs residing in the United Arab Emirates (UAE) favor real estate investment. Many prefer to purchase homes in India not necessarily to return, but instead as a safer means to invest their additional income. This preference shows a notable rise compared to the previous year.
Factors Driving Real Estate Investment
Several factors contribute to this increased interest in real estate investment. The rupee’s lower value and the volatile nature of stock markets enhance the appeal of property investment. Moreover, sluggish real estate prices often lead to higher returns. In addition to these factors, the availability of bank loans plays a significant role in NRI investment decisions.
Impact of Loan-Cap Removal
The advantages of availing bank loans have been amplified by the central government’s decision to remove the loan cap. With this new policy, NRIs' bank deposits will no longer be subject to restrictions on loans, thereby increasing their investment potential.
Opportunities Across Cities.
A vast number of opportunities are available for real estate investment, extending beyond metropolitan areas to tier-II and tier-III cities. Reports suggest a considerable housing shortfall in the country, reaching well above 25 million homes. This shortage predominantly affects middle-income housing. To address this gap, the Government of India plans to offer higher incentives to attract more private investments.
Addressing the Housing Shortfall
The government aims to bridge the gap between the limited supply and the high demand for houses. It is estimated that the housing shortfall will be around 10 million per year by 2030. The demand for mid-segment housing is increasing across India, including suburbs of New Delhi, NCR regions, and other metropolitan cities. Prominent cities like Bangalore, Chennai, and Kolkata are also experiencing increased demand for such housing.
Booming Cities for Investment
In addition to Tier-I cities, tier-II cities are also witnessing increased demand for mid-segment housing, making these areas highly sought after by NRIs. NRIs aim to capitalize on available opportunities in booming cities such as Pune and Thane. Certain locations in Navi Mumbai have also reported higher demand.
Real estate assures higher rates of return. For instance, real estate in Ulwe is said to have a growth rate and price appreciation of 145%, making it an attractive option for real estate investment. Reports indicate that there are over a dozen cities offering returns exceeding 90%.
Incentives Attracting Investors
The discounts and freebies offered by real estate developers also attract investors, particularly NRIs. Some developers offer discounts of up to 15% to revive the sluggish market, further boosting NRI investment.
With the Indian government poised to remove the loan cap on bank deposits for NRIs, they will be permitted to remit amounts up to $1 million. The removal of this cap is expected to significantly enhance NRI real estate investments.