An estimated 30 million NRIs living in 160 countries are looking at India for real estate investment opportunities.  India has been consistently notching up the top slot in terms of the expatriate remittance consecutively for years together.  A substantial portion of the investment flows into real estate due to easing of investment norms.

In Chennai, NRI investment in real estate has picked up from 10% in H1 2020 to 17% in H1 2021, according to CII-Anarock consumer sentiment survey.    Among the top choices for realty investment in metros include Chennai.  The preference among NRI investors is for built homes and plotted development projects, according to leading property consultants.  As the threshold limit for investment in commercial property is high, only a few investors are evincing keen interest in office and retail assets.  With the recent market regulator Sebi’s decision to reduce the minimum subscription amount and trading lot size for REITs, it will encourage retail investors to participate in the publicly traded instrument in future. 

An estimated one lakh Chennaiites are working in Dubai alone in the Gulf and they are looking for investment in varied real estate assets, according to Gulf real estate outlets operating in Dubai. The current expatriate Indian population in UAE is 3 million.  A number of builders have established their represented offices in Dubai and appointed channel partners in other AGCC countries targeting an overall NRI population of over 80 lakh in the Gulf.  Housing finance companies like HDFC, ICICI Bank, Bank of Baroda and LICHF have their representative offices in Gulf and other countries. 

The NRIs’ preference for investment in real estate ranges from apartments to luxury villas, budget villas and vacant lands.  Not many new residential launches were launched in the past two years in Chennai due to the impact of lockdown and the exodus of labourers besides hike in input costs.  As a result builders have consolidated their strength to focus on existing unfinished projects before launching new ones. In fact Chennai has the lowest unsold inventory level at less than 3,000 residential units among metros in the country.  As a result demand for secondary market units has picked up.  Chennai’s leading property dealers feel that there is a sudden surge in demand for large size apartments ranging in the price range of Rs 2 crore – Rs 6 crore in city areas.  NRI investors are looking for distress sales as liquidation properties are entering the market in large numbers due to the impact Covid-19 pandemic forcing liquidity crisis and limited avenues to raise funds. 

Areas driving housing demand in select areas in Chennai include CBD areas, ECR, OMR, Mount-Poonamallee road, Tambaram and Guindy, according to realtors focusing on NRI investment in Chennai.  A number of NRIs are opting for home loans to invest in immovable property.  According to leading HFCs in Chennai, NRI home loan demand has been consistent for investment in apartments and plots.  Due to dip in land prices in city areas, there has been an uptick in demand for outright buying of land in CBD areas.  Group housing is contemplated among friends and relatives with the result there is a demand for land among investor groups keen to build a cluster of homes for their friends and families’ use in India.  Unlike earlier, NRIs are keen to deal with branded developers nowadays, according to Anarock retail outlet sources in Abu Dhabi. 

A significant requirement is the increasing awareness and the need for property management services while investing in homes by NRIs.  This is because a substantial number of NRIs wish to continue their stay abroad and are in search of credible and professional services to manage their homes during their absence in India.  Realising the paramount need and the impending demand, developers are nowadays focusing on establishing a separate entity for  providing property management services as an integral part of the overall service.   This extended service has also boosted the confidence level among NRIs and the overall NRI housing demand, say realtors.

There are leading realty companies which feel that NRIs nowadays are on liquidation mood of their immovable properties already invested in India particularly those who are employed in Gulf countries.   This is due to the fact that with the economic slowdown, declining job prospects and layoffs, they wish to liquidate their assets in India and repatriate the sale proceeds for prolonged stay abroad. 

As regards NRI investment in real estate, there is no restriction on the number of residential/commercial properties that an NRI/PIO can invest in India under the general permission available under FEMA.  However, repatriation of sale proceeds of residential property is restricted to two units only.  With the easing of NRI investment norms, there is no need to go to RBI for permission to sell and the powers have been decentralised now.  Authorised dealers have been permitted to arrange for remittance of sale proceeds on production of basic documents.  NRIs are also allowed to repatriate up to US$ 1 million, per financial year, out of the balances held in the NRO account subject to payment of tax, including the sale proceeds of immovable property acquired by way of inheritance or gift or settlement.