NRIs considering investment in commercial realty sector

BDI Ambaram

Photo Courtesy: Internet 

Delhi/NCR:  Non-resident Indians (NRIs) are evincing interest in commercial properties besides residential ones too. Earlier, the high-end, luxury residential homes were the major key of attraction for NRI buyers.

 "Slowdown in the market in the past few years has considerably affected the return on investment from residential projects. Owing to the imminent slowdown in the residential market, especially luxury segment, NRIs looking to invest in Indian real estate are now diversifying their asset exposure and considering investments into commercial properties,” says Divya Seth Maggu, Associate Director (valuation and advisory services) at Colliers International India.

In fact, NRIs still have several advantages in both categories. The low residential prices and certain incentives in the form of discounts are also available to serious buyers.

"RERA has ensured that investment into residential property has also become much safer, and the risks previously attached to home purchase have thereby been moderated. Also, considering that many NRIs will return to India at some point, owning a home in their respective cities is a very sound investment for the future,” says Santhosh Kumar, Vice-Chairman of ANAROCK Property Consultants.

Developers state that this is the perfect time for investment in the realty sector "It is a great time for NRIs to invest in the residential real estate market as there has been a significant drop in the property rates after demonetization. Moreover, regulatory changes like the implementation of GST and RERA have made the market more equitable and real estate purchase simply by bringing in better accountability and transparency,” Harinder Dhillon, Vice-President (sales) of DLF, said.

"NRIs are now diversifying their asset exposure and investing more into commercial properties as it offers a longer lease period, assuring a steady income. When you invest in the commercial real estate, it’s not just the building itself that has meaningful intrinsic value, it also includes the land," Ravish Kapoor, Director of Elan Group, said.

Due to high demand from corporate, commercial office space vacancies has almost halved in the past six years. Even, in some prime locations in cities like Bangalore and Pune, the vacancy has reached even single-digit levels.

"The launch of Real Estate Investment Trusts is expected to further attract investments in office properties going forward. In contrast, the residential real estate is facing challenges of high inventory pileup, low consumer interest and sales. Stagnant prices on the residential front and slowdown in new launches have pushed affluent NRI investors towards commercial properties," Divya Seth Maggu said.

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