Why Do Indian Developers Cater To NRIs?

Real estate developers in India have been increasingly engaged in building residential projects that appeal to Non-Resident Indians (NRIs). NRI investment in Indian real estate is so high that Australian Cricketer Steve Waugh recently launched Waugh Global Realty, a portal to cater to their residential property demands. Waugh's portal lists projects of leading Indian developers like the Lodha Group, Godrej, K Raheja, and Sobha Developers. Similarly, Tata Housing recently opened an international office in Dubai.

Here is why the investment demand from NRIs is crucial for developers of residential real estate in India:

• NRIs have a strong preference for property in India, though they may not plan to live here. Wealthy Indians, whether they live in India or abroad, prefer to invest in real estate. For example, according to the Reserve Bank of India (RBI), as of December 2012, 53 per cent of India's household assets were invested in land or property. So, it is not surprising that Indian real estate developers are keen on luring NRIs, who number roughly 30 million across the world.

• Real estate developers expect the Narendra Modi government at the Centre to initiate more investor-friendly reforms. In the current financial year, for example, some experts had estimated NRI investment in Indian real estate to nearly double from its earlier level of 18 per cent of the total investments in Indian real estate.

• Many NRIs prefer to have a home in India where they can stay when they come back home. Some of them even prefer to come back and live in their home town after retirement. This explains why NRIs are likely to buy homes in cities like Cochin and Pune. NRIs are also likely to have greater trust in their ability to make profits in real estate in India.

• The US Dollar tends to strengthen relative to Indian Rupee. This raises the affordability of Indian homes, as far as NRIs are concerned. The value of currencies in the Middle East, too, tend to be strong relative to the Indian Rupee. When property in India becomes cheaper to NRIs, they are likely to invest more.

• In the recent past, real estate markets in India have been stagnant. So, developers have been doing the best they can to woo prospective customers. NRIs and High Net worth Individuals (HNIs) are among them. They are also running property shows and online sale melas to lure NRIs.