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Look Beyond The Obvious.
In the past three to four years, despite the world real estate market going through a period of stagnation, the Indian real estate market has boomed.
You must have noticed appreciating property prices and scaling demand in both metropolitan cities and smaller towns. The most interesting part here is, the people who are responsible for this rising demand are not just people living within the country but also those that were born here but now are residents of some other country.
I am talking about the Non-Resident Indians (NRIs).
These people left their country, their family, their ancestral homes, decades ago and settled in a new part of the globe in search of better educational and occupational opportunities. Whenever we hear of NRIs, we have an image of individuals who earn hefty paychecks in dollars.
But it is time you shift your viewpoint.
Yes, it is true that they might be accessing a much more advanced lifestyle living in a more developed country than India, but they are not living in India! The Indianness one enjoys living in this country cannot be replicated or substituted by any technological advancement in any part of the world.
But this is a real-estate centric newsletter, you ought to be wondering why am I so fixated on NRIs today?
Well folks, while I earlier mentioned how NRIs are responsible at large for driving the demand for real estate in India, especially luxury real estate, I am going to delve deeper into how & why!
The focal point here is, while we all think it is about money, as it turns out, it is not always about money.
There is indeed more to this than meets the eye.
Why are NRIs purchasing chunks of land in India?
Nostalgia.
Legacy.
Emotions.
Yes, it is not money after all. Being in the land and buildings market for around a decade now, I have observed how land purchasing decisions of NRIs are driven largely by emotions.
These individuals left their homes out of lack of resources in India. They are still as much Indians as we are, and unsurprisingly miss the feeling of living in India. A country with unique diversity and culture like no other.
- The NRIs indeed invest in the feeling of nostalgia, a dream of one day settling down in their motherland and staying connected to their original roots. In a country like India, irrespective of how much a person earns, at the end, they all want to leave behind a legacy for their families. This is what the NRIs aspire as well. These individuals look to purchase luxury bungalows or villas in upcoming parts of the country with the dream of living their retired life there one day.
- Interestingly, NRIs do not only look to live their retired life back at home in India but also often plan of spending their vacations here in their home country. A considerable number of NRIs travel back to India during the holiday season to reconnect themselves with the culture they were born and brought up in. This phenomenon once again positively impacts the country’s real estate as these Non-Resident Indians look to purchase a vacation home for their families and spend some quality time together.
Who would have thought emotions play such a big role even today?
Talking about emotions, did you know, a considerable number of NRIs look to buy houses not in India’s metropolitan cities but in towns and cities they were born in. While the former offers a better lifestyle, it is no much to the comfort of living near to your parents and your family.
Not all of the NRIs who are now settled in far flung corners of the world hailed from Indian metropolitan cities. Many of them hailed from places such as Pune, Cochin, and Surat. The result of this emotional drive is a considerable rise in the demand for luxury properties in these parts of the country.
Are you wondering who in their right mind would leave a developed country with a plethora of facilities to comeback to India?
As the old saying goes, the grass always looks greener on the other side.
On numerous occasions, a lot of NRIs have decided to travel back to India after a period of time especially in their old age. Why? Well emotions rather than money make us humans.
While we all look for freedom and solitude in our adolescence, come the old age and all we look for is our family by our side. And as it turns out, all of this is great news for the rising Indian real estate market.
But why now?
Why is all of this happening now all of a sudden?
What has triggered all NRIs to hit that buy button since the past two to three years and fulfil their dreams?
There is a combination of economic reasons that have caused the NRIs to act now.
- The weakening of Indian Rupee against USD and Dirham
- Indian real estate showing an upward trend despite the contradictory mood of the global real estate market
- Rise of the Indian economy leading to a higher purchasing power for Indians, resulting in a surging demand for luxury properties
- Dramatic rent inflation in India encouraging more and more Indians to buy properties, providing an increasing number of purchasing options for NRIs
The weakening of the Indian rupee is undoubtedly the most crucial factor among these.
With the Indian rupee becoming weaker and weaker, it increases the purchasing power of the NRIs with the same amount of money. A decade ago, they might have been able to purchase a relatively smaller plot of land for the same amount of dollars, than they can now.
Another aspect you must be wondering about is:
How are people living thousands of miles away purchasing properties in India?
Well, it is time you credit technology.
Virtual tours and interactive digital inspections have become the new norm. For the past 2-4 years, these technologies have turned into deal makers when a property is being purchased by an NRI sitting in some other time zone altogether.
The potential buyers can inspect each and every corner of the house with the help of virtual tours. Besides viewing the property virtually, technology has also facilitated an easy and convenient way for NRIs to shortlist real estate options, contact developers, and understand the processes involved all through a few online interactions.
At the same time, the Indian Government has undeniably played a key role in all of this as well. The establishment of Real Estate Regulatory Authority (RERA) has instilled confidence in the NRIs regarding protection from fraudulent practices.
People sitting miles away from the property they are purchasing are no longer afraid of being cheated owing to the sense of safety that RERA provides.
All in all, as NRIs turn towards the Indian real estate to cater their emotions and realign with their culture, it all helps the Indian real estate industry. The heavy demand for luxury properties and vocation houses is helping the Indian real estate to grow further from its current estimated market size of USD 178.83 billion.
For all you Indians who are currently residing outside the country’s geographical borders, if you plan to spend the next part of your life, living in the country you were born, this is your sign to get down to business!
That’s a wrap for this edition of Open House, I will bring you some more interesting chatter about the real estate world next week, but until then:
Know the difference between being patient and wasting your time.
Disclaimer: This newsletter is intended for informational purposes only and should not be construed as professional advice.
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