NRIs buy luxury and affordable homes, convert them into their rental incomes: Report

There are many ways one can acquire indirect income and one of the most common ones is putting your house on rent. Real estate has been many Indian's favourite investment and asset. But among those are the non-resident Indians who enjoy the perks of not only owning a property in their country but also reap a certain amount as the rent. Moreover, there is no less demand for people looking for luxury and affordable houses for rent.

The NRIs have a very high purchasing power and they easily net the premium properties. Since they hardly live here, they put their property on rent and can come back to it whenever feasible. In other words, their house is an asset as well as an income generating machine.

 Before 2015, NRIs witnessed a better yield in their returns in residential investments. But post 2015, after the note-ban, the RERA, and GST, there was a paradigm shift in wealthy NRIs focus specifically, towards commercial properties as they promise far higher yields.

According to Anarock Property Consultants, 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. They also add that 2018 saw the recovery period as NRI investors shifted their focus on affordable housing for rental income and better long-term appreciation.

"For NRIs, the real estate still continues to be an end-user driven due to location and unique product offering", states Rahul Maroo, Onkar Realtors. He further said that the demand for smaller units of housing is on the rise and they are benefitting with a good interest from NRIs for projects like  Signet, Lawns & Beyond and Sereno, with over 20 per cent of new sales.

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Observing the upsurge in property buying in  Transcon Developers’ Uber Luxury project ‘Transcon Triumph at Andheri West, Sarojini Ahuja, VP, sales and marketing, Transcon Triumph, comments, "This year the NRI investments in the project were seen at 18% at Rs. 30 crore as compared to 8% at Rs. 11 crore last year." 

According to statistics, investment by NRIs in 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.

Niranjan Hiranandani, VP, Assocham's states that for NRIs, it is a bit of present-day rental income and down the line either self-occupation or arbitraging capital appreciation to buy a bigger home in the future. He further adds that with the demand side interventions in the recent like permission to divide capital gains from the sale of a property to be invested in two properties (instead of one as allowed earlier), increased limit of rental TDS deduction, second self-occupied home to be exempted from notional rental income and other such changes, both the investor, as well as end user, will be attracted to the market.
 

(By Ruchika Goswamy)