NRI end users to dominate home buying trend in Indian market

V Nagarajan

In a significant trend post-Covid-19 pandemic, a much higher percentage of NRI respondents in the latest CII-Anarock consumer sentiment survey are scouting for properties for self-use. At least 53% of NRI respondents who will buy properties in India in the coming months are expected to buy for end-use whereas 47% will do so for investment. The pre-Covid-19 survey in H1 2019 saw a reverse trend, with the end-use to investment ratio at 32:68.

In comparison to the previous survey (H2 2020), trends indicate that Chennai is seeing increasing interest by NRIs, while their preference for the other top cities remained more or less the same. IT hub Bengaluru continues to be the hot favourite for at least 22% NRIs, followed by Pune with 18% in favour of it. Chennai drew 17% votes.

 One major factor influencing this change could be that many NRIs sought to return to India amid the pandemic-infused uncertainties and dwindling job prospects globally. Most saw the top seven cities as the best options, though many are also considering smaller cities to be close to their families.

 With many intending NRI property buyers preparing to return to India, the highest demand is for luxury properties with state-of-the-art amenities.  50% NRI respondents prefer luxury properties priced INR 1.5 crore, and 32% favour premium properties priced between INR 90 lakh - INR 1.5 crore. Only 11% favour mid-segment homes (priced INR 45-90 lakh), and just 7% favour affordable housing properties.

 “There has been a very perceptible increase in Indian housing demand from NRIs at this stage of the COVID-19 pandemic. In the recent years before COVID-19, many NRIs were in wait-and-watch mode amid the various structural reforms in the economy and the real estate industry. Before the pandemic, many NRIs keen on real estate preferred commercial properties - housing was low on their wish list. In short, the fallout of COVID-19 on global economies and job prospects has once again rekindled housing demand among NRIs,” according to Anuj Puri, Chairman - Anarock group.

 The CII-Anarock consumer sentiment survey also highlighted the demand for bigger homes. At least 48% NRI respondents preferred larger homes of 3BHK configurations (1,500 sq. ft.) while 28% favoured 2 BHKs. A significant 24% stated a preference for 4 BHKs or higher configurations.

 “The demand for luxury homes had fallen over the past few years, especially after demonetisation. In the housing sector, affordable homes were the top pick for NRI buyers in this period. The fact that luxury housing is back on the NRI radar despite unaccounted monies no longer being a factor is notable. Currently, the top metros favoured by NRIs are Bengaluru, Pune, Chennai and Mumbai. Tier 2 and tier 3 cities are also gaining traction, most notably Chandigarh, Kochi, Surat, Ahmedabad and Lucknow.”

 Developer credibility is the top priority for most NRI respondents scouting for property in India. Most NRIs will only deal with branded and leading developers now. Rational pricing and reliable after-sales service - which is perceived as assured with branded players - are NRI property buyers’ second and third top priorities.

I bought a commercial property with my friend in Pune.  My friend recently expired due to health reasons.  Now how the 50% of the ownership will be treated?  Please clarify.  Hitesh Shah, Sharjah.    

One has to look at the purchase agreement which will define the ownership and the respective rights in the commercial property.  In the event if it is owned by joint ownership basis, the deceased’’s share shall be transferred to the survivor.   

I am planning to invest in rent income generating property in Bengaluru.  Is loan available for investing in such property?  What are the tax benefits while investing in such categories? Arvind Khanna, Dubai.

You can make investment either in residential or commercial property with the sole objective of receiving a regular flow of rental income.  Loans are available while investing in rental income generating properties.  Tax benefits are also available.  From the rental income, you will get a 30 per cent standard deduction towards repairs, maintenance and collection charges of the property.  This deduction is available irrespective of the fact whether you spend on the repairs or not.  Moreover, complete deduction without any upper limit is available on the interest paid for the loan amount taken to purchase property which is given on rent.