In the last year alone, NRIs pumped a whopping USD 13.1 billion into the Indian real estate market.
India’s luxury real estate landscape is in the midst of a remarkable transformation. From 2023 to 2028, it is expected to grow at a compound annual growth rate (CAGR) of over 5%, making it clear that the demand for luxury homes is increasing. The property’s luxurious living space, state-of-the-art amenities, and prime location are attracting the attention of domestic and international investors. India is not just witnessing a shift in the aspirations of its people. It is also becoming a global hotspot for luxury real estate investment.
One notable trend amidst this change is the growing interest of Non-Resident Indians (NRIs) to invest in luxury real estate in India. In the last year alone, NRIs pumped a whopping USD 13.1 billion into the Indian real estate market. According to projections, by 2025, NRIs will account for 20 per cent of the country’s total real estate investments, further reinforcing their pivotal role in shaping the trajectory of the industry.
Narrowing down to regional preferences, 24% of NRI investors are leaning towards Mumbai’s real estate sector, indicating that Mumbai is the ‘preferred destination’ for luxury real estate investments. This highlights the influential role that NRIs play in guiding the trajectory of the industry, which extends to region-based choices as well.
So, what is behind the increasing tendency of NRIs to invest in luxury real estate in India?
1. Economic growth and stability: India’s consistent economic growth and stability are the key drivers behind the growing interest of NRIs in the country’s real estate market. A rapidly expanding economy and robust infrastructure development provide the perfect environment for real estate investment. NRIs are attracted by the prospect of attractive returns in a growing economy, increasing their confidence in the safety of their investments. This economic growth is reflected in a report that predicts that NRI investments will account for 20% of India’s real estate sector by 2025, with Bengaluru and Mumbai emerging as top investment destinations.
2. Favorable government policies: The Indian government has introduced several policies to encourage foreign investment in the real estate sector, making investing in the real estate sector more accessible to NRIs. Initiatives such as Real Estate Regulatory Authority (RERA), Goods and Services Tax (GST) and relaxation of Foreign Direct Investment (FDI) regulations have brought transparency and accountability to the sector. NRIs can now invest with confidence knowing that their investments comply with international standards.
3. Diversify your investment portfolio: For NRIs, investing in luxury real estate in India is a strategic move to diversify their investment portfolio. Real estate assets act as a hedge against market fluctuations, and luxury properties in prime locations offer prestige and increased long-term value. By allocating funds to luxury real estate in India, NRIs can balance their investment portfolio and reduce risks associated with fluctuations in other asset classes.
4. Asset value and price growth: India’s luxury real estate market, especially in major cities such as Mumbai, maintains competitive prices without compromising on quality or amenities. This affordability factor creates a lucrative opportunity for NRIs to invest in premium properties at relatively lower costs compared to comparable properties overseas. Additionally, rising rental yields and the potential for long-term appreciation in property values make it more attractive to NRIs seeking long-term investment returns and capital appreciation in India. Earlier this year, luxury home sales in Mumbai surged by nearly 50%, making it one of the leading investment options. Overall, attractive pricing, potential for value appreciation, and high rental yields make luxury real estate in India an attractive option for NRIs looking to invest.
5. Luxury goods: Renowned Indian developers are raising the bar in luxury real estate by offering premium amenities that cater to the sophisticated global lifestyle of NRIs. State-of-the-art features such as state-of-the-art security systems, smart home technology, wellness centers, and premium concierge services perfectly suit non-residents’ discerning tastes. This collaboration between a leading developer and his NRIs’ evolving needs highlights the growing demand for luxury real estate in India, highlighting its increasing sophistication and international appeal.
6. Emotions, culture, and retirement aspirations: Many NRIs maintain deep emotional and cultural ties to their home countries. Investing in luxury real estate in India often stems from a desire to maintain a connection with one’s roots, create a family legacy, or establish a retreat for personal use while visiting . These investments are driven not only by financial reasons, but also by very personal and meaningful motivations.
Luxury homes are an attractive retirement option for NRIs considering returning to India. Luxury properties offer the opportunity to live out retirement in an intricately designed community with amenities and services tailored to different age groups. These communities ensure a comfortable and secure lifestyle in retirement.
However, while the prospects of investing in luxury real estate in India are attractive, NRIs also have to contend with certain challenges such as currency fluctuations, regulatory complexity, and the need for reliable property management. Collaboration with reputable real estate advisors, legal experts and property management services can help NRIs make informed investment decisions.