B’luru realty mkt emerges key investment destination for NRIs

India's IT capital Bengaluru has evolved as the major investment destination for NRI investors in residential real estate.

Real estate industry pundits are claiming that 2023 is going to be a remarkable year in connection with NRI investments as the slew of infrastructure projects, new IT corridors emerging in the city and conducive atmosphere in terms of peace, law and order situation in Bengaluru, and cosmopolitan outlook are also contributing to the trend.

Sources say that NRIs from Asian regions, from countries like Singapore and from the Middle East, are also making huge investments apart from those in the US. The trend is catching up as NRIs in the Middle East and Singapore want to come back to India and settle down here.

Bengaluru, Hyderabad and Pune are preferred destinations for investments in the real estate sector, say trade experts.

BCD Group MD Angad Bedi said: "As we observe the increase in NRI investment in India and particularly in Bengaluru, 2023 is destined to be a remarkable year, with expected investments reaching an astounding $80 billion by the year's end, a remarkable increase from the $65 billion invested in the previous year.

"First, India's economy is growing steadily, providing a fertile environment for NRIs to capitalise on emerging opportunities. Secondly, the proactive measures taken by the Indian government to facilitate investment opportunities for NRIs, combined with an array of enticing incentives, have fostered an investment-friendly environment."

"The recent appreciation of the rupee has increased the appeal of Indian assets to non-resident Indians with Bengaluru and Mumbai, the biggest markets with a combined 42 per cent share of the H1 2023 sales. Bengaluru is witnessing huge interest from UHNIs and NRIs with the residential prices in the city experiencing the highest increase of around 11-12 per cent y-o-y in the first half of this year as compared to the 6-9 per cent price rise in major cities during the period," he added.

Cornerstone Group CEO Captain K. Srinivas said that the country’s real GDP growth witnessed a yoy growth of 6.1 per cent as of March 2023 and is expected to reach 6.5 per cent by FY24.

This economic resilience is creating a favourable condition for the NRIs to foresee a bright future where they can not only multiply their investments multifold, but also get long term value appreciation. The case in point is the country’s real estate sector where a lot of NRIs are infusing their cash flows due to the sector’s phenomenal growth story, especially in Bengaluru, he added.

This positive investment sentiment can be witnessed across all asset classes as NRIs are equally enthusiastic about the country’s luxury residential segment that is growing exponentially, as well as the CRE segment, he said.

"Apart from the existing office REITs, Q2-23 saw the launch of India’s maiden retail REIT ‘Nexus Select Trust’ and it raised Rs 32 billion from its share sale in May 2023. A lot of NRI investors are actively eyeing on these developments as they see great potential in the market. Besides, with the rising demand, large scale urbanisation and overall uptick in land and real estate prices across the key markets in India, the NRIs are enthusiastically optimistic to park their money in various investment machines in India," Srinivas said.

Property First founder and MD Bhavesh Kothari said: "The country’s GDP is expected to reach 6.5 per cent by FY24. These robust economic conditions have created and continue to create favourable conditions for the NRIs to invest in real estate as they can multiply their investments, benefit from land appreciation value and envision a promising future. This has led to increased investments, especially in high-growth markets like Bengaluru where the luxury residential segment and CRE segments are in high demand."

In Bengaluru, the investment inflow is quite optimistic as the city and its various sub-markets are witnessing large-scale infrastructural growth and the emergence of new IT corridors, especially in the north suburban areas and areas like Sarjapur, that witnessed some massive land deals in the last 2 years, Kothari added.

Being the IT nerve centre of India and a global tech city, Bengaluru is also attracting NRI investors who are investing in the growing co-working segment and the traditional Grade A office spaces, on the back of continued demand from global MNCs and enterprises, he added.

According to industry experts, the surge in NRI investment in residential real estate is a trend that is expected to propel 2023 investments to an anticipated $25 billion, up from $20 billion in 2022. This trend is supported by a surge in housing demand, increasing disposable incomes among NRIs, and an emphasis on infrastructure development by the government.