The Indian real estate market is on an upward trend, with increased investment flows and brighter prospects, according to various reports. A recent survey by SBNRI, specializing in investment and advisory services for NRIs, highlighted a surge in NRI investment in commercial real estate. The study revealed that over 50% of surveyed NRIs are interested in diversifying their investment portfolios and prefer investing in commercial real estate.
Additionally, the survey predicts a compound annual growth rate (CAGR) of 9.2% for the Indian real estate sector from 2023 to 2028. The growing interest among NRIs in commercial real estate investment can be attributed to several factors. Residential property is no longer the only lucrative investment option, as investors now show greater interest in commercial property. With the evolving market scenario and the availability of Grade A commercial properties, it has become a highly preferred asset class for NRIs.
Aman Trehan, the Executive Director of Trehan Iris, states that commercial property investment has always been preferred due to the growing economy, supportive government policies, and higher return on investment. NRI investors are also actively investing in commercial real estate, and the government and RBI are focused on facilitating a seamless investment process to enhance NRI investment across the commercial realty segment. Industry reports indicate a significant surge in NRI investments in the Indian commercial real estate market, with top cities like Mumbai, Delhi-NCR, and Bengaluru dominating the highest NRI investment share, reflecting bolstered confidence and strengthened market sentiments.
Investing in the Indian commercial real estate sector can generate passive income and offer various benefits such as capital appreciation, portfolio diversification, and protection against inflation. As a result, it is an attractive asset class for investors looking to optimize their returns and minimize risks. The survey shows that a significant proportion of NRIs (34%) are motivated by the potential for higher ROI, while almost half (48%) consider the convenience factor, such as a streamlined investment process and easy access to suitable properties, as a critical driver for investing in commercial real estate.
Kaustubh Chandra, Manager of Marketing and Leasing at Brahma Group, recognizes that the Indian real estate market is undergoing a transformation, as NRIs exhibit a growing inclination towards commercial reality. Chandra notes that with the integration of technology and the implementation of standardized frameworks, NRI investors have become more active in the Indian commercial real estate market. He explains that commercial real estate provides several advantages, such as capital appreciation, protection against inflation, and portfolio diversification, which makes it a compelling asset class for investors looking to minimize risks and optimize returns.
The increased accessibility of investment opportunities is making it more feasible for NRIs to invest in the commercial real estate sector, which is good news for developers who can expect a surge in demand for their properties.
The survey conducted by SBNRI indicates that only 9% of the NRIs surveyed prefer to invest in the residential real estate segment for a diversified investment portfolio, while a significant 18% are strongly inclined towards investing in the commercial realty segment. With the introduction of fractional ownership in India, NRIs can now pool their resources and invest as little as Rs 25 lakh to acquire Grade A commercial property, which was previously not possible. This has made commercial real estate investments more attractive with potentially higher returns, and investors no longer need to spend Rs 5 crore to Rs 10 crore to acquire a commercial property. According to SBNRI, this trend is expected to grow stronger.
Vinay Wadhwa, General Manager-Sales, Vatika Ltd, highlights that NRIs are increasingly drawn to commercial real estate in India due to the potential for high rental yields and capital appreciation. Major Indian cities such as Mumbai, Delhi, Gurgaon and Bangalore are especially attractive to NRI investors due to their strong economic growth and high demand for office and retail spaces.
According to the survey, 18% of NRIs are attracted to the property management facilities offered by commercial real estate investments, such as property maintenance and tenant management. This emphasizes the increasing demand for professionally-managed properties that can offer a hassle-free investment experience and generate stable rental income.
NRI investment in commercial real estate in India is expected to remain strong, consolidating its position as a significant asset class in its investment portfolio. This trend is expected to persist among NRIs from various countries, highlighting the increasing significance of commercial real estate as a preferred investment option in the Indian real estate market.
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