Low-Risk Real Estate Investment: Opportunities For NRIs
Non Resident Indians have always been eager to invest in the Indian realty success story in one way or the other. The real estate sector has been a direct beneficiary as many NRIs have invested in properties here owing to their emotional attachment with the country of their birth. A recent report by Associated Chambers of Commerce of India (ASSOCHAM) has also revealed that NRIs feel confident about investing in the Indian real estate sector today compared to some years ago. A number of big ticket announcements by various developers backed by government support have opened up a world of investment opportunities for the NRIs. Here is a look at some of the opportunities in the low risk real estate sector ideally suited for NRIs.
Tier 2 and Tier 3 Cities Driving Growth: Unlike in the past where investment worthy realty projects were limited to big cities and metropolitans, smaller centers are now driving the growth of the Indian realty sector. With increase in the quantum of projects in smaller centers, NRIs today have a better opportunity to invest in projects that cost substantially cheaper than big city projects.
Ready-to-move-in vs Under Construction: Indian real estate developers have been notorious in the past for slow work on development projects. Even in metropolitan centers the average delay for real estate projects ranges between one to two years. Various reasons can be cited for the delay. From financial crunch, with the realty sector devoid of any fresh investments, to environmental clearances and to other approvals. Hence, for NRIs it is better to invest in ready-to-move-in properties compared to under construction ones. It not only gets difficult for NRIs to keep track on the work on under construction projects but delays can make it even harder. Choosing the former option will offer lower risks as chances of project delay is almost ruled out.
Investing in Real Estate Investment Trusts (REITs): The introduction of Real Estate Investment Trusts (REITs) has created a new asset class in the financial markets allowing NRI investors to be part of the Indian growth story. With REITs, NRIs can now invest in the Indian realty sector without having to physically purchase land or property. Since REITs will pool money from investors and invest them in income-generating assets, this makes for a perfect investment option for the NRIs. The fact the REITs will be controlled by market watchdog SEBI makes the investment transparent and risk free, something which augers well for NRI investors.
Smart City Development Projects: Ever since the big ticket announcement in the last union budget where the finance minister announced an allocation of Rs 7060 crore for development of 100 smart cities, its development has been one of the biggest talking points in the real estate sector. Owing to the possibility of impressive returns due to full government promotion in these projects, Smart cities offer a perfect investment opportunity for NRIs. They would also be able to track the progress of such smart city developments online since most of these big ticket projects are being initiated in collaboration with international realty developers. Smart city projects offer both small and long term prospects making it ideal for a large number of NRIs. The handful of smart city projects on which work is currently underway including the likes of Gujarat International Finance Tec-City (GIFT), Lavasa Smart City and Kochi Smart city in Kerala, there has been an increment of 10 to 15 percent in less than a year making it ideal investment opportunity for NRI investors.
