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Reforms to Real Estate Policy Boosting NRI Investors' Attitudes
Policy changes have made India’s real estate market an appealing platform for foreign investments.
Most NRIs are workers and wage earners on a global scale. They are forced to be more practical while investing in the Indian real estate market because of the instability of the global job market. The other factor was the absence of a reliable platform for NRIs investing in this country’s real estate to invest in real estate in this country.
The policies which revived and influenced NRIs investment decisions are
• Real Estate (Regulation and Development) Act 2016
• Demonetisation
• Foreign Direct Investment (FDI) reforms
• Relaxation of norms in Real estate Investment trusts (REITs)
• Goods and Services Tax (GST)
• Benami Transactions (Prohibition) Amendment Act
• Changes in Accounting standards IFRS
These policy reforms are helping to bridge the trust deficit between the institutional/ NRI investors and India’s real estate property players. In all mentioned reforms, RERA has been pivotal in addressing this trust block and boosting confidence in NRI investors.
The relaxation in some of the norms in REITs will directly benefit the commercial real estate property segment, especially retail, office, logistics, warehousing, etc. There has been a consistent rise in demand for commercial spaces like Grade A offices and IT parks in Tier I and Tier II cities. Due to this, NRI investors’ focus on commercial properties has risen considerably, as this sector is delivering more satisfactory yields as compared to the residential segment.
Many Indian large realtors are experiencing a revival in NRIs investment plans with most of their upper-price segment properties which are RERA compliant being sold out to customers majorly belonging to the NRI community.
Major Factors Influencing NRI Investors
As per the industry experts’ analysis, NRIs always consider four major factors while investing in the Indian property market, they are
• Developers with a strong delivery record
• Minimum initial investment
• High rental potential
• RERA compliance
• Status of the land & its use
The interest to invest in the real estate sector by NRIs is especially driven by long-term fundamentals like safeguarding retirement plans, emotionally connect, better returns and yield on investment.
The right time for investment
The experts are stressing that this is the right time for NRI investors as there are more investment growth opportunities, in both the residential and commercial real estate markets of India. This is due to the following reasons:
• The property prices in India are at the bottom
• Realtors are rolling out highly attractive prices for all projects which are at par with international standards
• RERA compliance makes the market more transparent in all its processes
• Not much appreciation in the real estate market of developed countries
• Depreciation of Rupee
• Availability of ready-to-move residential properties at affordable rates
• Mid-segment and smaller projects with lower price tags are available
The previous pure price-play mechanism of the realty market is now shifting to facts like quality, commitment to deliver on time, and the right price strategy. Policymakers are continuously working towards simplifying the purchasing processes, rules, and regulations prevailing in the real estate market. Further relaxation in FEMA norms and some laws by RBI regarding property buying by NRI Diaspora is likely to give a big boost to their investment in the Indian property market.