NRIs looking towards Tier-2 cities for real estate investment – Money News

In the ever-evolving landscape of India’s real estate sector, 2024 is poised to witness a heightened surge in the investments by non-resident Indians (NRI), particularly in the luxury residential market. As per a NoBroker report, between 2019 and 2020, NRIs constituted 10% of total real estate investments in India, which surged to 15% in 2023 and are projected to reach 20% by 2025. This surge in interest in luxury properties is fuelled by various factors that make the industry an increasingly lucrative investment opportunity for them.

Non-resident Indians (NRIs) have been increasingly looking beyond major metropolitan cities in India for investment opportunities. Tier-2 cities stand as vibrant hubs of opportunity with their better work-life balance, connectivity, and affordability that are uniquely positioned to spearhead India’s journey towards a thriving future envisioned in “Viksit Bharat” by 2047. Earlier, rental yields hovered between 2% and 3%, but now they have surged to a more lucrative range of 3% to 5%. Additionally, significant capital appreciation has been witnessed across key localities in major cities over the past two years. According to a recent report by JLL India, almost 44.4% of land deals transacted by developers between January 2022 and October 2023 were in Tier II and III cities. As a result, Tier-2 cities are increasingly becoming a promising destination for the investment in luxury residential properties.

As urban living becomes increasingly chaotic, there is a noticeable trend among Non-Resident Indians (NRIs) and other individuals seeking a serene retreat away from the hustle and bustle of city life. The idea of owning a luxurious home surrounded by breathtaking natural scenery has become increasingly popular among those seeking a break. Additionally, government initiatives such as the Smart Cities Mission have bolstered these cities attracting greater investment and leading to notable improvements in infrastructure, connectivity, and the availability of amenities, further enhancing their appeal to investors and homebuyers alike.

Also Read: Where do HNIs in India prefer to invest these days?

Emerging trends of NRI investment in tier-2 cities

Let’s take a closer look at the trends of NRIs making investments in tier-2 cities, as these cities offer stable and steady returns on real estate investments compared to the volatile markets of other cities. They view these cities as relatively low-risk investment destinations with the potential for long-term appreciation.

Affordability and return on investment

Tier-2 cities offer a favourable economic landscape characterized by a lower cost of living and property prices relative to metropolitan areas. This presents an opportunity for investors to capitalize on higher returns as these cities undergo appreciable growth. Additionally, these cities provide appealing real estate prospects for NRI-seeking investment opportunities or business ventures, due to reduced operating costs and simplified business setup processes. The infusion of NRI investments into these cities not only unlocks growth potential but also fosters affordability, contributing significantly to the advancement and prosperity of these regions.

Appealing capital appreciation prospects

For NRIs, investing in the residential sector is not just about generating financial returns but also about preserving their lifestyle and heritage. They see ownership in luxury real estate as a chance to maintain ties with their homeland and transfer property to their descendants. Moreover, they consider their investment as a tangible and stable asset with potential value appreciation over time. They also foresee capital appreciation as demand for luxury properties in India grows due to urbanization, increased disposable income, and changing lifestyles.

Luxury lifestyle amenities

Non-resident Indians now prefer investing in premium and luxury homes in well-planned tier-2 cities to seek a sophisticated lifestyle that extends beyond mere residences. Amongst tier-2 cities, the tri-city region comprising Chandigarh, Panchkula, and Mohali is also becoming immensely promising due to its strategic location, connectivity, quality of life, and economic opportunities. To meet this demand, luxury real estate developers are offering gated communities along with an extensive range of amenities tailored to meet their preferences. These amenities include cutting-edge fitness centers, lavish infinity pools, chic rooftop lounges, personalized concierges, and bespoke experiences such as private movie theatres, indulgent spas, and wellness centers, intending to elevate the overall living standard and foster a sense of exclusivity and grandeur among the NRIs residing in these properties.

In conclusion, the Indian real estate market is undergoing significant transformations, driven by several emerging trends. The influence of exchange rates, capital appreciation and more attracts NRIs to invest in it, who view the residential segment as a secure investment as it maintains a connection to their cultural roots and offers positive potential returns for future generations. Moreover, NRIs increasingly prioritize a luxurious lifestyle and eco-friendly homes, which can be attained by living in tier-2 cities.

(By S K Narvar, Group Chairman, Trident Realty)

Disclaimer: Views and facts expressed above are those of the author. They do not necessarily reflect the views of financialexpress.com. Readers are advised to consult their financial planner before making any investment.