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Vaibhav Jatia

Founder & Managing Director, Rhythm ResiTel

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Real Estate Investment Market & Foreign Real Estate Investment In India

Innovative developers have been leveraging networking technologies to organize interactive virtual tours, provide digital inspections of layouts, and facilitate streamlined paperwork processes and digital submission of legal documentation.

Besides being one of the world's most well-recognized industries, real estate is also India's largest employment generator, second only to the agriculture sector. With a CAGR of 30 percent, the dynamic sector's exponential growth rate is ably complemented by the expansion in corporate environments, increased demand for rental spaces, and the pressing need for accommodation in urban and semi-urban geographies.

Despite suffering setbacks during the pandemic and lockdown, the sector has done remarkably well under the circumstances and is expected to contribute approximately 13 percent of India's GDP by 2025, while reaching a market size of USD 1 trillion by 2030. Furthermore, the sector will likely witness more foreign or NRI (Non-resident Indian) investment, both in the short and long term.

Increased NRI Investment in India:

According to a recent study, NRIs invested over USD 13 billion in India's bustling real estate market in 2021, with the trend expected to grow by 12 percent in 2022, translating to investments worth almost USD 15 billion. In addition to convenient currency movement and lowered rates, technology has played a vital role in encouraging NRIs to identify and acquire highly-profitable real estate assets in India, despite their inability to visit the sites of their choice. Innovative developers have been leveraging networking technologies to organize interactive virtual tours, provide digital inspections of layouts, and facilitate streamlined paperwork processes and digital submission of legal documentation.

Interest from the GCC & Other Expat Communities:

The GCC region remains a substantial source of NRI investments in Indian real estate, collectively accounting for over 40 percent of the total foreign investments. In addition to them, expat communities from other parts of the globe are also investing in Indian real estate, led by the USA with 17 percent and Singapore at 12 percent. The UK, Canada, Germany, Kenya, and South Africa make up some of the other key markets for the booming industry.

Rising Average Ticket Sizes:

A factor that has gone partially under the radar is the average ticket size, which has skyrocketed since the pandemic. In 2021, the average ticket size of investment from the USA was USD 124,000, a significant increase from USD 111,000 in 2020. For the Singapore market, the average ticket size rose to USD 93,000 in 2021 from USD 91,000 in 2020, while for UAE, it grew by over 11 percent, reaching an USD 97,000 in 2021.

Increasing Popularity of the ResiTel Model:

A revolutionary business model gaining popularity amongst NRIs, the innovative ResiTel model is centered around resort suite ownership, combining the hotel accommodation experience with the outright ownership of a property. These suites are generally a part of large resort complexes located at popular vacation destinations. Suite owners have the option of utilizing the space as their private vacation home or including it in the resort's inventory while they are away. In the owner's absence, the suite becomes available for short-term accommodation to the public. In addition to the constant revenue generation through rent, owners need not hassle maintaining the property. The resort's management is obliged to take care of everything from marketing to bookings and housekeeping.

The Path Ahead:

Following a measured start at the outset of the pandemic, the real estate industry has been immensely successful in averting the COVID-19 curveball. The sector displayed extraordinary resilience and recorded spectacular sales in FY21, aided by the government's slashing of home loan interest rates and stamp duty coupled with the depreciation of the Indian rupee, prompting NRIs to invest in real estate heavily.

With the increased significance of owning a home or property under the current global circumstances and the intensified purchasing activity of NRI investors, the consumer sentiment for real estate is expected to be highly positive heading into 2022.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house



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