Among the key markets, Mumbai, Chennai, and Bengaluru are the most preferred followed by Pune, Ahmedabad, and Hyderabad with premium apartments and villas in high demand.
It is expected that by the year 2025, 20 percent of the real estate sector investments in this metro city will be made by NRI investors. (Image: iStock/ET Now News)
Investment in the real estate market has always been the first choice for the Non-Resident Indians (NRIs). The government’s mission to provide housing for all has impeded this sector. Among the key markets, Mumbai, Chennai, and Bengaluru are the most preferred followed by Pune, Ahmedabad, and Hyderabad with premium apartments and villas in high demand. Of these, Bengaluru has emerged as the top real estate investment destination for NRIs as the city offers convenience in all aspects, better connectivity, and a vibrant lifestyle.
Darshan Govindaraju, Director, of Vaishnavi group said that the increasing interest of NRIs in Indian real estate can be attributed to the gloomy global markets and fluctuations in high-yielding instruments such as Bitcoin propelling them to invest in markets with strong fundamentals. Highlighting the ‘The NRI Real Estate Report 2023’ report, he added that the contribution of NRIs to the Indian real estate sector has risen significantly. He also expected that the NRIs will account for one-fifth of all investments into the sector by 2025 from 10 percent in 2020.
“These investments are primarily undertaken from a rental income perspective and to have an early mover advantage in the rapidly growing luxury residential sector to yield rich returns later on. Furthermore, the development of luxury and ultra-luxury projects in real estate is attracting investors, marking a stark shift from pure-play land investments preferred by NRIs earlier,” says Govindaraju.
In residential projects, the NRIs prefer the luxury segment. Thus, Bengaluru, being the IT hub of the country, is one of the first choices for the NRIs. It is expected that by the year 2025, 20 percent of the real estate sector investments in this metro city will be made by NRI investors. Bhavesh Kothari, Founder and CEO, of Property First has identified North Bengaluru as a prospective area to invest in properties.
“North Bengaluru is a prospective area to invest in properties, primarily because the area offers a mixed portfolio of commercial and residential assets, thus providing more options to choose from. Besides, the improving infrastructure and connectivity to business and IT hubs make it an ideal location to invest,” Kothari added.
Smart investors carefully evaluate projects, using their knowledge of finance to identify profitable opportunities.
The real estate sector shines as a reliable strategy for wealth-building in the ever-evolving financial landscape. (Image: iStock/ET NOW News)
The real estate sector has consistently outperformed other assets in value appreciation and exhibits greater resilience to short-term market fluctuations compared to stocks. It shines as a reliable strategy for wealth-building in the ever-evolving financial landscape. The latest data released by real estate consultant Colliers showed that institutional investments in real estate stood at US Dollar 822.3 million during October-December 2023, as against US Dollar 1,299.40 million in the year-ago period.
Kishan Govindaraju, Director, of Vaishnavi Group said, “The complete resurgence of the residential segment, following a period of decline, serves as a testament to the opportunities within the sector. The successful transaction of 82,612 housing units during the July-September quarter reflects a noteworthy 12 percent year-on-year increase, marking a significant milestone for the industry.”
He added that rental income from real estate properties generates a passive cash flow, helping investors cover mortgage payments and maintenance costs, and providing a consistent profit—especially valuable during economic uncertainties. “real estate offers versatility in investment strategies, catering to both those seeking long-term stability and those pursuing short-term gains. Options range from residential and commercial properties to real estate investment trusts (REITs), enabling investors to tailor their portfolios to specific financial goals and risk tolerance,” Govindaraju added.
Smart investors carefully evaluate projects, using their knowledge of finance to identify profitable opportunities. The shift towards these non-traditional real estate ventures reflects a strategic move, steering away from mutual funds, bonds, and conventional assets. “In cities like Bangalore, investors display profound market acumen, staying abreast of the latest trends. Their financial acumen goes beyond traditional stock portfolios because they actively look for ways to increase their wealth,” says Shesh Rao Paplikar, Founder & CEO, of BHIVE Workspace.
He suggests that over the next decade, alternative asset classes will command substantial investments, posing formidable competition to established financial instruments. “The investor landscape is evolving, driven by a pursuit of higher returns and a keen understanding of emerging market dynamics, reshaping the contours of wealth creation in the bustling cityscape,” Paplikar said.
Several factors including end-user demand, improved regulatory mechanisms (RERA and IBC), sector consolidation, enhanced oversight of real estate projects by banks/FIs/Funds, and evolving investor protection regulations by SEBI contribute to increased confidence and transparency. Sunil Pareek, Executive Director, Assetz Property Group said, “India’s high urbanization rates, coupled with a young workforce, aged under 28, comprising over 50% of the population, drive significant investment in the real estate sector. This demand is fuelling innovation in both sustainable development and investment products to suit all wallets.”
“With favorable unit economics, lower capital values, higher cap rates, and lower rentals compared to global cities, Indian real estate offers a distinctive investment opportunity with higher yields and returns on investment. The positive climate is expected to persist until entry prices align with key global markets and other preferred investment options,” Pareek said when asked about how long will this go on.