A large percentage of NRIs (non-resident Indians) now prefer to buy properties in newly launched residential projects back home, a latest consumer sentiment survey has revealed.
The survey, conducted by Indian real estate service providing company Anarock, found that 44 percent of the property buyers are now doing it for investment reasons.
The figure is a strong indication of the much-maligned real estate sector in India, which is fast regaining the trust of buyers after introduction of regulatory initiatives like the RERA (Real Estate Regulation and Development Act).
“Bangalore is the favourite investment destination for NRIs,” Anarock’s Consumer Sentiment Survey H1 2019 said.
Residential properties continue to be a major draw for investments by NRIs, especially for the Gulf-based ones. Indian expats in the UAE are considered to be the single-largest community of NRIs n the world.
According to the United Nations’ International Migration Report of the International Organization of Migrants (IOM), the UAE had over 3.3 million Indians in 2017.
Sharp contrast
The survey findings are in sharp contrast to the trends in the last 2-3 years, a large majority of residential property shunned launch projects in India – widely termed as ‘paper projects’ – and preferred either ready-to-move-in or projects to be completed under one year.
Real estate industry analysts said the increasing trend of buyers coming back to invest in newly launched residential property projects will be a big relief to project developers to raise funds through advance sales, at a time when banking finances have almost dried up for them.
RERA implementation and the recent GST (goods and services tax) Council’s decision to lower the tax rate for the real estate sector were the two major factors which influenced buyers increasing preference or newly launched projects, the Survey said.
“Our latest survey confirms that a conducive reform-driven market environment and Government sops have breathed life to Indian real estate,” Anuj Puri, chairman, Anarock Property Consultants, said.
Long-term investors with realistic returns expectations are returning to invest in real estate, he said.
Effective RERA enforcement influenced over 50 percent buyers in Delhi-NCR to take the real estate plunge in 2018. In Kolkata, nearly 58 percent of buyers invested due to lower home loan rates, the survey said.
The survey has also revealed that Tier 2 & 3 cities in India have emerged as the new investment hotspots, thanks to low property prices and improved infrastructure boosting their overall growth potential.
“Our survey confirms a 26 percent investor approval rating for tier 2 & 3 cities,” Puri said.
The survey has indicated that 70 percent of prospective buyers preferred properties priced within $114,328 (Rs 800,000).
In line with the buyers’ preference for ‘affordable’ houses, property developers in India have been actively focusing on the affordable and mid-range housing segments in the past 5 years, industry analysts said.
“The share of new supply in the affordable and mid-segment combined (within $114,328) stood at 77 percent in 2017-2018,” they said.
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