Transparency in the real estate sector, brought about through legislations enacted by the Narendra Modi-led BJP government at the Centre since the year 2014 other than assured high returns on investments, is the major factor that has wooed Non-Resident Indians (NRIs) back into the property market in India.
As per a study conducted recently by a private agency, investments by NRIs in the real estate sector stood at a mere six per cent in the financial year 2014-15. However, this figure has nearly doubled to reach the 11 per cent mark in the current financial year. The survey predicts that the figure is expected to reach 12.5 per cent in the next financial year. The total investment by NRIs in Indian real estate is projected to reach anywhere near the range of $13.5 billion by the end of the next financial year.
Nearly half of the investments in real estate are being made by NRIs settled in the Gulf countries, including Saudi Arabia, UAE, Oman, Kuwait, Qatar and Bahrain. Investments have also been coming from North America, including Canada, as well as from certain European countries and the East Asian nations of Singapore, Malaysia, Japan and Korea.
And investments are not only being made in Tier 1 metro cities in India that are replete with civic and commercial amenities, but also in fast-expanding Tier 2 and Tier 3 cities. Investments in Tier 2 and Tier 3 cities like Jaipur, Pune, Bengaluru, Bhubaneshwar, Hyderabad and Kochi can be attributed to the NRI instinct of hedge against the future: most NRIs aspire to return to their hometown at some point of time instead of permanently settling abroad. Tier 2 and Tier 3 cities have also witnessed rapid growth in infrastructure over the past few years with a maze of highways, expressways, metro networks and air connectivity routes linking them to the major cities of the country. The small cities have thereby become the preferred destination of NRIs in many instances.
The Real Estate (Regulation & Development) Act, 2016 has restored the faith of homebuyers, particularly NRIs, in the property market in India. Ensuring greater transparency and accountability apart from a clear timeline for delivery of projects to investors, the Act has been very crucial in the growth of NRI investments in the country. Those settled outside the country are assured of a government mechanism to keep track of their investments in the property market and proper redressal of their grievances, if any, in a timebound manner through the various provisions of the Act.