Investments by non-resident Indians (NRIs) into the Indian real estate market has surged over the past 20 months, growing at 15-20 per cent and their share in total investments in the sector is expected to rise to a fifth from 10-15 per cent earlier, according to industry players.

In 2023, NRIs invested over $13 billion in real estate and by 2025, their investments are expected to account for 20 per cent of total real estate investments in India, according to Saurabh Runwal, Associate Director, Runwal.

“Undoubtedly, NRIs constitute a significant part of the overall sales in the markets. In any given quarter, at least 10-15 per cent of total sales is by the NRIs,” said Santhosh Kumar, Vice-Chairman, Anarock Group.

While NRIs have always been investors in properties in India, the current surge in their purchases is being fuelled by the optimism in the Indian economy, stricter compliance norms for developers under RERA regulations and capital appreciation in properties, he said. The rally in the domestic stock markets has created wealth and that is being channeled into real estate.

According to Anarock, there was a 15-20 per cent increase in demand by NRIs in 2023 compared with 2022 and the first half of 2024 has seen similar traction.

Current demand

Runwal said NRIs accounted for 8-10 per cent of his company’s sales, their preferences being across township projects, mixed-use developments, sky villas and duplexes. The developer sells upscale apartments in and around Mumbai.

The current demand from NRIs would persist for the next three years, said Bhavik Bhandari, Chief Sales & Marketing Officer, Ashwin Sheth Group. He pointed out that NRIs liked to invest with safe brands with a good pedigree and track record. With more real estate players listing and subjecting themselves to disclosures and transparency, NRIs have a wider choice now. When looking at real estate as an investment, they had a horizon of three-four years for prices to move up, which meant that they were also buying under-construction properties.

Apart from investments, the growth prospects in the Indian economy are attracting a lot of NRIs to shift base back to India and buying homes to stay, Kumar said.

“NRIs invest in Mumbai’s real estate to diversify investment portfolios,” said Rahul Thomas, Whole-Time Director, Suraj Estate Developers.

“The motivation for investments is bolstered by the desire to ensure financial stability for family members in India and the strategic advantage of a depreciating rupee, which enhances currency gains when repatriating funds,” he pointed out.

Larger houses

Most NRIs prefer to buy properties priced over ₹90 lakh, according to Anarock. Within this, close to half were buying houses in the range ₹90 lakh to ₹1.5 crore, about a fifth in the range ₹1.5-2.5 crore and a tenth above that.

NRIs have traditionally preferred apartments by established builders, or existing bungalows as resale properties. With reputed builders entering the plotted development segment, some NRIs are investing in this as well.

“We are observing a clear trend in which NRIs are increasingly choosing larger and more expensive homes,” said Runwal. Many NRIs were looking for properties that offer not only luxury but also ample space, privacy and exclusive amenities that aligned with the high standards of living they were accustomed to abroad. “Larger homes provide an added sense of comfort and prestige, which is why we have seen a rise in our sales of sky villas and penthouses to NRIs.”

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