The Indian real estate sector remains a critical component in the diversification of investment portfolios. (Representative image)
52% of NRIs consider investing in Commercial Real Estate (CRE) to diversify their portfolio in the Indian real estate segment.
The Indian real estate segment has started rolling back on its track after a prolonged stagnancy brought forth by the COVID-19 pandemic. It has become a popular investment choice for individuals seeking high returns and long-term stability. The lucrative investment option has no longer remained complicated for foreign investors and NRIs looking to own a chunk of land in their home country, said a new report.
The Indian real estate segment demonstrates an upward trajectory with the projection to exhibit a growth rate of 9.2% CAGR during 2023-2028, the report added.
Considering the elevated real estate investment demand by NRIs, SBNRI – the NRI-focused wealth management FinTech platform has recently unveiled its findings about NRIs from top international countries eyeing the Indian commercial realty segment as a promising option for yielding safe and higher returns.
The survey revealed, around 52% of NRIs consider investing in Commercial Real Estate (CRE) to diversify their portfolio in the Indian real estate segment. This exhibits CRE as one of the most preferred asset classes for NRIs over others like the residential segment.
Traditionally, the residential sector was the only real estate alternative preferred for investment. However, with fractional ownership emerging in India, CRE investments have become most sought after as NRIs no longer have to inject Rs. 5 crore to 10 crore to purchase a commercial property. Instead, a set of investors can pool their funds as minimum as Rs. 25 lakh to purchase a Grade A commercial property and enjoy higher returns, the report underlined.
The demand for investing in CRE is largely driven by acquiring better returns as 34% of NRIs see this as a big reason to invest in CRE. In addition, around 48% of NRIs believe high convenience including the seamless process to invest, finding the right properties when they invest in CRE.
Furthermore, 18% of NRIs consider property management facilities like finding tenants, upkeep of the property, etc. as the biggest reason to invest in CRE than the residential segment.
The SBNRI report revealed – NRIs from top countries investing in CRE that include Singapore (9%) and UK-based NRIs (8%) outperforming the investments made in the residential sector with 6% of NRI investments. On the contrary, the survey report showcased a contrasting trend in UAE-based NRI investments with 7% of investment being made in the CRE while 9% in the residential property segment.
Apart from this, other countries like the US and Australia have gradually picked up the trend with 4% of NRI investments made in the commercial realty segment as compared to 3.40% and 5.18% of investments in the residential segment. The survey report highlighted Canada based NRIs show lesser interest with 3% of investments in the Indian real estate sector.
Investing in the Indian real estate sector showcases a desirable proposition for NRIs. The exponential boom in NRI investments in the sector is driven by a myriad of factors.
Previously, there was a lack of accessibility to investment opportunities for NRIs in India. However, technology integration and standardisation of certain frameworks have cleared the way for NRIs to enter the segment.
According to the survey report, around 18% of NRIs are strongly inclined towards investing in the commercial realty segment while 9% prefer to invest in the residential segment for a diversified investment portfolio. As a result, CRE is projected to continue gaining traction among NRIs from different countries, making it a major asset class in their Indian investment portfolio.
The Indian real estate sector remains a critical component in the diversification of investment portfolios. It can provide a multitude of advantages along with passive income such as capital appreciation, inflation protection and diversification.
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