Several real estate markets have been identified as prospective investment destinations among the HNI and NRI community. However, USA, UK, Australia and UAE have emerged as the frontrunners in terms of preference.
Real estate has always been high in the priority list of High Networth Individuals (HNIs) and Non-Resident Indians (NRIs). While, investment was previously restricted only to Indian boundaries, now it spans across foreign markets too, due to easy access to residential projects offered by home-based developers. Several countries have emerged as realty hubs for ultra-luxury investors and people of Indian origin. Key markets that have a wide base of Indian population and are fast catching up with the realty trend include the USA, UK, Australia and UAE.
Industry experts opine that two factors corroborate this trend. Principally, willingness of luxury homebuyers to invest in foreign markets, specifically in the brand name which is synonymous to quality and construction back home in India and curiosity of Indian developers to tap realty markets abroad.
Niranjan Hiranandani, CMD, Hiranandani Group of Companies says, “Earlier, most of the developers operated in a local market. Then came the phase when they went ‘national’. Thus, the logical next step was the acceptance of the fact that one cannot be ‘localised’ in terms of business in a globalised economy. Additionally, realty market evolved and new age customers who invested in real estate in India have seen global real estate trends and desire homes that are ‘on par’ with international norms. From building homes with international specifications to building a similar project in another country was the next big move.”
Developers in India have mapped their presence in several countries. The Gulf Cooperation Council (GCC), ASEAN nations and the United Kingdom are the locations where Indian developers have ongoing real estate projects. Perception-wise, Dubai, seems to attract maximum number of Indian developers, adds Hiranandani.
Affordable housing drives investment
According to Rahul Nahar, Managing Director, XRBIA Developers, “International markets such as Dubai and UK are under-supplied markets for affordable housing projects. This has driven developers to try their luck in these countries. As these nations witness huge migration each year and residents scout for low-key investment options rather than paying hefty rentals, investment opportunities for Indian developers in affordable housing have enhanced significantly.”
Most of the developers predominantly invest in the outskirts where the cost of land does not form a significant chunk of the project’s delivery cost. International markets have become appealing investment spots for developers on account of their easy access to major transportation networks. Besides, capital and rental yields in the organised and regulated real estate markets abroad are largely steady and do not display sudden hikes or dips.
Indian developers would certainly go global in future to seize the brand building opportunities and fetch higher return on investments. However, as the risk quotient is higher, the outflow would not be marginally high. Only few reputed brands that have delivered successful projects in the home land would be able to garner traction overseas. Also, technology challenges, foreign regulations and norms of operation are other impediments that restrict the entry of developers in nations abroad.