Why the COVID-19 crisis could bring NRI investors flocking to real estate

The coronavirus pandemic has upended the global economy and thrown markets into turmoil. At such a time more and more NRI’s are turning towards real estate as a safe investment haven.

Background

Even before the pandemic, 8-10% of all NRI remittances of over $80bn were towards real estate accounting for 10-20% of annual residential sales.

According to a 2018 World Bank report, India received the highest remittances last year with NRIs sending as much as $80 billion back to India. The Indian diaspora comprises 17.5 million individuals, with the number increasing by 10% from 15.9 million in the last four years alone according to a World Bank Report. Major sources of NRI investments include the USA, Canada, GCC, UK, Singapore, Malaysia, etc.

“NRIs have been one of the key drivers of growth for Indian real estate.  The implementation of RERA has brought transparency to the sector and boosted the confidence of NRI investors” – Mayur Shah, Managing Director, Marathon Group

Real estate. Real asset. Real stability.

Typically most NRIs invest in a combination of mutual funds, real estate or deposits but with the markets in a free fall and fluctuating wildly according to news cycles, lots of investors are turning towards more stable assets like real estate.

Within real estate, demand is expected to be skewed towards metro cities and greater demand is expected for ready to move property. In the current scenario, ready to move property offers the least risk and has the dual advantage of generating immediate cash flows in the form of rentals and being a more liquid asset for sale as compared to under-construction property.

Real estate can potentially create wealth for generations to come and is known to be relatively stable.

Check out Marathon Group’s properties in the fastest appreciating areas of Mumbai

Weak Rupee and low interest rates

As on the date of this article being written, the rupee is at an all-time low of 76.42 to the dollar. As per a Reuters report the rupee is likely likely to stay weak over the course of the year. This means that NRI’s can get greater value for their earnings than ever before.

India’s largest lender SBI, also recently cut its marginal cost-based lending rate (MCLR) by 35 basis points across all tenors. This will lead to lowering of home loan interest rates across the board.

Uncertain futures abroad

A lot of NRI’s face uncertain futures abroad and will want to prepare the ground for returning to their country. For instance, the reduction in oil prices may threaten the livelihood of Indians in the Gulf countries whereas, in the US, H1B visa workers may be forced to return. An industry report estimated that close to 20-30% of H-1B and H4 visa holders may be forced to return home in the next 5-7 months. So the market may not just see the return of pure investors, but a lot of NRI’s will be purchasing a property with the intention of returning to India.

A lot of other factors will influence NRI’s to invest in Indian real estate. The introduction of the Real Estate Regulatory Act brought much-needed transparency and accountability to the sector.

So if you’re an NRI what should you do?

If you have sufficient savings, now may be the best time to invest in Indian real estate. Anticipating a slowdown, a lot of developers have also already started offering lucrative deals.

Explore and book from home

A lot of developers are quickly adapting to the lockdown measures and the expected decline in site visits by offering great digital experiences of their projects.

Marathon Group offers a full digital tour which includes 3D tours, walk-throughs, video conferencing with sales and actual site images of our projects, enabling buyers to assess the product remotely.

Schedule a digital tour of a Marathon property today.

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