Real Estate Investment Market Foreign Real Estate Investment In India-Vaibhav Jatia
Innovative developers use networking technologies to organize interactive virtual tours, provide digital inspections of layouts, and facilitate streamlined paper processes and digital filing of legal documents.
The real estate sector is not only one of the world’s most recognized industries, but also India’s largest employment generator, second only to the agricultural sector. With a CAGR of 30 percent, the dynamic sector’s exponential growth rate is complemented by expansion in the corporate environment, increased demand for rental space and urgent need for accommodation in urban and semi-urban regions.
Despite setbacks during the pandemic and lockdown, the sector has performed remarkably well under the current circumstances and is expected to contribute around 13 percent to India’s GDP by 2025 and reach a market size of USD 1 trillion by 2030. Additionally, the sector is likely to see more foreign or NRI (Non-Resident Indian) investment in both the short and long term.
Increased NRI Investments in India:
According to a recent study, NRIs invested over US$13 billion in India’s bustling real estate market in 2021, with the trend expected to grow 12 percent through 2022, representing nearly US$15 billion worth of investments. Along with convenient currency movements and lower interest rates, technology has played a crucial role in encouraging NRIs to identify and acquire highly profitable real estate investments in India despite being unable to visit the locations of their choice. Innovative developers use networking technologies to organize interactive virtual tours, provide digital inspections of layouts, and facilitate streamlined paper processes and digital filing of legal documents.
Interest from GCC and other expat communities:
The GCC region remains a significant source of NRI investment in Indian real estate, collectively accounting for over 40 percent of total foreign investment. In addition, expat communities from other parts of the world are also investing in Indian real estate, led by the US at 17 percent and Singapore at 12 percent. UK, Canada, Germany, Kenya and South Africa are some of the other key markets for the booming industry.
Increasing average ticket sizes:
One factor that has partially stayed under the radar is the average ticket size, which has skyrocketed since the pandemic. In 2021, the average ticket size of US investments was $124,000, a significant increase from $111,000 in 2020. For the Singapore market, the average ticket size increased from $91,000 in 2020 to $93,000 in 2021, while for the United Arab Emirates it grew by over 11 percent, reaching $97,000 in 2021.
Increasing popularity of the ResiTel model:
The innovative ResiTel model is a revolutionary business model that is becoming increasingly popular among NRIs. It focuses on resort suite ownership, combining the experience of hotel accommodation with full ownership of a property. These suites are typically part of large resort complexes in popular vacation destinations. Suite owners have the option of using the space as a private vacation home or adding it to the resort’s inventory during their absence. In the absence of the owner, the suite is made available to the public for short-term accommodation. In addition to the constant generation of income from rent, owners do not have to worry about the maintenance of the property. Resort management is committed to taking care of everything from marketing to bookings to housekeeping.
The way forward:
After a slow start early in the pandemic, the real estate industry has been immensely successful in averting the COVID-19 curve ball. The sector showed exceptional resilience, posting spectacular selling in FY21, helped by the government’s cuts in home loan rates and stamp duty coupled with the devaluation of the Indian rupee, prompting NRIs to invest heavily in real estate.
With the increased importance of owning a home or property in the current global circumstances and increased buying activity by NRI investors, consumer sentiment towards real estate is expected to be very positive well into 2022.