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Updated Oct 17, 2024 10:21 IST

Real estate

Festive seasons imbue properties with a sense of warmth and family, making them especially appealing to potential buyers. (Image: Ashwin Sheth Group/ETNOW.in)

Real Estate Market: The Indian real estate market has seen a significant transformation in recent years, making it an increasingly attractive destination for NRI investments, especially in premium residential and commercial properties. Speaking with ETNOW.in, Ashwin Sheth, Chairman and Managing Director, Ashwin Sheth Group discusses the evolution of the Indian real estate market and role of NRI investments.

How has the Indian real estate market evolved in attracting NRI investments, particularly in residential and commercial properties? Are there any key markets or regions where NRI interest has surged in the past year?

Cities like Mumbai, Bengaluru, Hyderabad, Delhi NCR, and Kolkata have emerged as key hotspots, thanks to their robust infrastructure, excellent connectivity, and thriving business ecosystems.

In addition to these major metropolitan areas, cities such as Pune, Chennai, and Ahmedabad are also gaining traction among NRIs. These markets offer promising growth potential and relatively lower entry costs, making them appealing for those seeking value-driven investment opportunities. The luxury real estate sector, in particular, is flourishing in prime locations like Goa, where NRIs are drawn to spacious, amenity-rich properties that elevate their lifestyles and provide long-term investment value.

Moreover, there has been a growing NRI interest in commercial properties, fueled by the potential for lucrative returns and supported by favorable government policies amid India’s strong economic growth. While certain challenges persist, the opportunities in the market far outweigh the risks. With the right guidance and a strategic investment approach, NRIs can capitalize on these opportunities to achieve significant returns on investment.

Given the favorable exchange rates for NRIs, what kind of returns and appreciation are they likely to expect in the Indian real estate sector in the next 2-3 years?

Investing in Indian real estate offers NRIs several key advantages, including the potential for significant returns, portfolio diversification, and the opportunity to maintain a tangible connection to their homeland. Given the favorable exchange rates, NRIs stand to benefit from property value appreciation, which has already been on an upward trajectory. This trend is expected to continue over the next 2-3 years, making Indian real estate an attractive investment avenue.

Historically, real estate in India has outperformed traditional investment options such as fixed deposits and bonds, providing NRIs with the prospect of higher returns. The combination of appreciating property values and rental income opportunities further boosts the potential for profitability. Additionally, the ease of investing remotely from abroad, with streamlined processes and tailored investment choices, enhances the appeal for NRI investors.

Looking ahead, the Indian real estate sector is poised for strong growth. For instance, the demand for data centers is projected to rise by 15-18 million square feet by 2025, driven by the increasing need for digital infrastructure. Furthermore, the Indian real estate market is expected to grow to $5.8 trillion by 2047. These factors present NRIs with an excellent opportunity to capitalize on India’s economic growth, positioning them for substantial rewards in both the residential and commercial real estate sectors in the coming years.

How do festive season campaigns affect the real estate market, and what role do digital marketing and international outreach play in driving NRI interest in property investments?

Festive seasons imbue properties with a sense of warmth and family, making them especially appealing to potential buyers. At Ashwin Sheth Group, we understand the cultural significance of these periods and tailor our marketing strategies accordingly to convert hesitant buyers into homeowners. Our recent campaign, ‘Kismat ki Chaabi’, exemplifies this approach, celebrating the festive fervor of Durga Puja, Navratri, and Diwali.

As part of the campaign, we distribute 10,000 keys, with some unlocking flats and other exciting prizes. This creates a unique and engaging buying experience that resonates with the festive spirit, drawing buyers in with the promise of luck and prosperity.

Developers also leverage this season by offering exclusive deals, attractive discounts, and flexible payment options, further incentivizing purchases during this period.

Ashwin Sheth Chairman and Managing Director Ashwin Sheth Group

Ashwin Sheth, Chairman and Managing Director, Ashwin Sheth Group

Digital marketing plays a pivotal role in amplifying our reach to a global audience, particularly NRIs. Through online platforms, we showcase property listings, conduct virtual tours, and provide potential buyers with a comprehensive understanding of our offerings. By leveraging social media, SEO, and targeted online advertising, we are able to highlight the benefits of investment, share success stories from fellow NRIs, and organize webinars that provide valuable market insights and legal guidance.

This approach allows us to connect with NRIs more effectively, offering them a convenient way to explore opportunities in Indian real estate, particularly during the festive season when buyer sentiment is at its peak.

With recent policy measures and reforms by the Indian government, such as RERA and GST, how have these impacted NRI confidence in investing in Indian real estate?

The introduction of key reforms such as the Real Estate (Regulation and Development) Act (RERA) and the Goods and Services Tax (GST) has significantly boosted NRI’s confidence in the Indian real estate market. RERA’s stringent regulations have been instrumental in protecting buyers, fostering a more organized and transparent marketplace. By ensuring developers meet specific standards and maintain full transparency regarding project timelines, costs, and quality, RERA has created a level of accountability that reassures NRIs, making investments more secure.

Additionally, GST has streamlined the tax structure, replacing the complex array of indirect taxes with a single, simplified tax system. This has not only reduced the cost ambiguity in real estate transactions but has also made the process of investing in property far more straightforward for NRIs. The clarity in tax obligations allows NRIs to make informed decisions with confidence.

Government initiatives aimed at promoting affordable housing have further attracted NRI investors who recognise the increasing demand for residential properties in India. The combination of these reforms has made the Indian real estate market more appealing by enhancing transparency, ensuring buyer protection, and simplifying tax regulations.

As a result, we have seen a marked increase in interest and participation from NRIs, who now view the Indian real estate sector as a reliable and rewarding avenue for investment.

With several states offering stamp duty reductions or discounts during festivals, how are these policies influencing property investment decisions among NRIs?

Stamp duty reductions and discounts offered during festive seasons have a notable impact on property investment decisions among NRIs. These financial incentives reduce the overall cost of acquisition, making property investments more accessible and attractive. For NRIs, this is particularly appealing, as it allows them to maximize the value of their investment, especially in premium or high-demand areas.

The cultural significance of festivals, often seen as an auspicious time for making important financial decisions, resonates deeply with NRIs who are emotionally connected to their homeland. This sentiment encourages many to consider property purchases during festive periods, whether to secure a family home for visits or to plan for future retirement in India.

Additionally, when these discounts are paired with broader government initiatives aimed at promoting affordable housing, the appeal of investing in Indian real estate is further enhanced. NRIs find this combination of financial savings and policy-driven incentives a compelling reason to invest.

Ultimately, these policies not only stimulate immediate sales but also foster a positive sentiment toward the Indian real estate market. The festive offers create a sense of urgency and opportunity, encouraging NRIs to actively engage in property investments during these periods.

How do fluctuations in the repo rate impact property demand and pricing in the real estate market?

Fluctuations in the repo rate, which is the interest rate at which the central bank lends money to commercial banks, play a crucial role in influencing property demand and pricing in the real estate market. When the repo rate decreases, borrowing costs for banks are reduced, which leads to lower interest rates on home loans. As a result, housing loans become more affordable for buyers, boosting demand for properties. This surge in demand often drives up property prices, as more buyers enter the market, competing for available inventory.

On the other hand, when the repo rate increases, borrowing costs rise, making home loans more expensive. This tends to decrease housing affordability, leading to a dip in demand. With fewer buyers in the market, property prices may stagnate or even decline as sellers and developers adjust to the reduced activity. Additionally, higher borrowing costs can deter developers from launching new projects, which impacts both supply and pricing trends in the market.

Overall, the repo rate is a key factor that directly influences the demand-supply balance in the real estate sector. Investors, buyers, and developers alike must stay informed about repo rate fluctuations, as they have a direct impact on financing options, property demand, and long-term market trends.

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