For last few years, affordable housing has been the talk of the town, in Indian real estate industry. However, it’s a newer trend among the NRIs and it’s being observed that they are taking more interest to buy ‘affordable’ as a viable rental income source. The average ticket size of NRI housing purchases has gone down from INR 70 lakh in FY16 to INR 51.5 lakh in 2018 [according to data from consultant 360 Realtors].
Among all types of investment options, real estate has always been a favorite investment asset class for non-resident Indians. NRIs with higher purchasing power have always been interested in purchasing luxury properties; however, in recent times, they are showing more inclination toward affordable homes as they bring better capital appreciation.
Affordable housing is expected to give returns of 8-10 percent for NRIs followed by 6-8 percent for mid-segment, 3-5 percent for luxury and 2-3 percent for ultra-luxury properties [according to a survey by Anarock Property Consultants].
Before 2015, investing in luxury properties was a far more lucrative option for the NRIs. Then came a wave of benchmark changes in the Indian real estate industry in the form of recession, demonetization, the RERA, and GST while the entire scenario of NRI-investment witnessed a paradigm shift and it started bending toward commercial properties and affordable segment as they promised higher yields.
According to statistics, investment by NRIs in the domestic property market, from $ 5 billion in 2014 to $ 10.2 billion in 2018 and the market is expected to touch $ 180 billion by 2020 [Source: www.business-standard.com].
In days to come, besides affordable homes, co-working spaces, shared accommodation, commercial, light industrial, warehousing and logistics segments are expected to see more NRI investments, say experts.