52% NRIs see Indian commercial properties emerging as a new asset class

The Indian real estate segment demonstrates an upward trajectory with the projection to exhibit a growth rate of 9.2% CAGR during 2023-2028. Considering the elevated real estate investment demand by NRIs, SBNRI– One-stop platform for NRIs has recently released its findings about NRIs from top international countries eyeing the Indian commercial realty segment as a promising option for yielding safe and higher returns.  

The survey says- that, around 52% of NRIs consider investing in CRE to diversify their portfolio in the Indian real estate segment. This exhibits CRE as one of the most preferred asset classes for NRIs over others like the residential segment. 

Traditionally, the residential sector was the only real estate alternative preferred for investment. However, with fractional ownership emerging in India, CRE investments have become most sought after as NRIs no longer have to inject Rs. 5 Cr. to 10 Cr. to purchase a commercial property. Instead, a set of investors can pool their funds as minimum as Rs. 25 Lacs to purchase a Grade A commercial property and enjoy higher returns. 

The demand for investing in CRE is largely driven by acquiring better returns as 34% of NRIs see this as a big reason to invest in CRE. In addition, around 48% of NRIs believe high convenience including the seamless process to invest, finding the right properties when they invest in CRE. Furthermore, 18% of NRIs consider property management facilities like finding tenants, upkeep of the property, etc. as the biggest reason to invest in CRE than the residential segment.   

The SBNRI report reveals – NRIs from top countries investing in CRE that include Singapore (9%) and UK-based NRIs (8%) outperforming the investments made in the residential sector with 6% of NRI investments. On contrary, the survey report showcases a contrasting trend in UAE-based NRI investments with 7% of investment being made in the CRE while 9% in the residential property segment.  

Apart from this, other countries like US and Australia have gradually picked up the trend with 4% of NRI investments made in the commercial realty segment as compared to 3.40% and 5.18% of investments in the residential segment. The survey report highlights Canada based NRIs show lesser interest with 3% of investments in the Indian real estate sector.

Investing in the Indian real estate sector showcases a desirable proposition for NRIs. The exponential boom in NRI investments in the sector is driven by a myriad of factors. Previously, there was a lack of accessibility to investment opportunities for NRIs in India. However, technology integration and standardization of certain frameworks have cleared the way for NRIs to enter the segment. 

The Indian real estate sector remains a critical component in the diversification of investment portfolios. It can provide a multitude of advantages along with passive income such as capital appreciation, inflation protection and diversification. 

According to the survey report, around 18% of NRIs are strongly inclined towards investing in the commercial realty segment while 9% prefer to invest in the residential segment for a diversified investment portfolio. As a result, CRE is projected to continue gaining traction among NRIs from different countries, making it a major asset class in their Indian investment portfolio.