Growth of the Indian real estate sector estimated to gain further momentum with infusion of NRI investments

This article is authored by Anmoll D Shroff, Founder and CEO, Graanth Realty

Real estate in India is currently experiencing a tremendous growth spurt, fuelled in no small part by Non-Resident Indian (NRI) investments. As per recent industry estimates, NRI purchases comprised 10 per cent of the total real estate investments in the country between 2019 and 2020. This figure has consistently increased to reach 15 per cent in 2024 and is predicted to grow further to reach 20 per cent by 2025.

Although heartening for Indian real estate players, the growing interest of NRIs in Indian real estate is not entirely surprising considering the interplay of numerous observable factors that have contributed to this uptick.

Search for stability

Ongoing geopolitical tensions, especially in CIS countries and Europe and the worry of recession in the US and Canada, have made NRIs increasingly cautious about investing in these regions. By contrast, India’s neutral political position coupled with NRIs’ overall positive sentiment about the economic stability brought forth by the country’s current political leadership has rendered it a far more attractive investment proposition, offering NRIs the stability they seek while making big-ticket investments.

Further, NRI buyers are motivated by India’s consistent economic growth, which instils in them confidence about the stability of the real estate market in the country. This also enhances their interest in luxurious, high-end properties, which hold the promise of even more lucrative returns in the long term.

Emotional connect

Another strong driver is the emotional attachment that NRIs feel to India, which encourages them to lay down ‘roots’ by purchasing a home in their motherland. What is interesting, however, is that in addition to the more cosmopolitan metros such as Mumbai and Bengaluru that have traditionally been a top choice for NRIs, there is mounting interest in luxury residential properties in smaller cities. Swaying NRIs’ decision in favour of such tier 2 cities is the rapid pace at which these centres are transforming, with improved connectivity, flourishing professional opportunities and the coveted better work-life balance.

The Viksit Bharat 2047 vision outlined by Prime Minister Modi and initiatives such as the Smart Cities Mission promises further improvement on all these fronts by attracting more investment, which will make these cities even more appealing to NRI buyers. The relatively lower cost of living and property prices in Tier-2 cities also point to a more improved quality of life.

Focus on luxury

Larger ticket sizes that are upwards of Rs 5 crore are common among NRI purchases (Larger ticket size purchases can’t be defined as upward of Rs 1 crore). Do note that up to 60 per cent of NRI residential real estate purchases are for self-use, while 40 per cent of buyers invest in homes for their family members living in India. This is because for NRI buyers, investing in real estate in India is a way to preserve their existing lifestyle and cultural heritage. Thus, they are more intent on properties that are perceived as stable assets that will potentially appreciate value over time and can be inherited by their descendants. 

In Tier 2 cities, especially, NRI purchases are focused homes in gated communities that offer amenities (including hi-tech gymnasiums, spas, wellness centres and bespoke concierge services) that will elevate their quality of life and also bear a sense of exclusivity and opulence.

Role of technology and transparency

NRI buyers are taking advantage of tech innovations, including trusted real estate websites and portals, that empower them to access information about and invest in property in real-time. Their enthusiasm is further sustained by favourable government policies, such as the RERA (Real Estate Regulation and Development Act)  have contributed towards improving trust, increasing transparency and boosting accountability and accessibility. Put together, these measures offer NRIs the much-needed reassurance to invest freely in Indian residential real estate.