India’s developers and Gulf-based NRI investors have a lot to cheer about. The elections resulting in the Modi-led government’s victory is correctly perceived as extremely positive for the real estate sector. This government has been a key enabler in turning around the fortunes of the real estate over the last year, with policies like GST, RERA (Real Estate (Regulation and Development) Act) and the “Housing for All Scheme”.
The win has reinforced the confidence of NRI investors. With a clear majority, it is evident to NRIs that the government will strengthen its ongoing initiatives and undertake even broader reforms for the industry.
Indian real estate, 12-15 per cent of which is driven by NRIs, is already undergoing a revival; sales volumes have picked up by an average by 50 per cent across major Indian cities. NRIs are now even more confident that the sector is headed for an increasingly transparent and structured future. Also, the government’s fabled pro-business stance is decidedly focused on attracting foreign investments.
If any evidence of NRIs’ favourable disposition is required, we only have to look at their participation in this year’s elections.
As per data by the Election Commission of India, 2012 saw a total of 10,002 registered NRI voters. This increased to 24,507 in 2018 — and almost tripled in 2019. Data published recently vouchsafes that from 24,507 in 2018, the number of registered NRI voters increased to 71,735 this year.
The total number of registered NRI voters is still less than 1 per cent of the entire Indian diaspora. However, we must also consider that India’s current annual population growth rate is 1.08 per cent. The NRI voter base has increased seven-fold in eight years.
In the run-up to the 2019 elections, the Overseas Friends of BJP organisation in the UK noted that an estimated 2,000 volunteers had registered with them to travel to India to campaign for their favoured party on the ground. Approximately 300 NRIs arrived in Gujarat and campaigned to secure votes for the BJP. They came from more than 20 countries, including the US and Dubai.
The Modi Effect on NRIs
If there is one section of Indian real estate investors who can fully appreciate Modi and all that he stands for, it is NRIs. GCC-based NRIs witness infrastructure-backed real estate development all around them in the Gulf countries. This provides them with a rather direct reference point from which to view the market back home.
NRIs in other developed countries are exposed to the benefits that highly-regulated real estate markets in the US, UK and Europe deliver to investors.
In previous years, the hope of someday seeing the Indian property market catch up with such highly-evolved standards was a forlorn one. The greatest need was for a government with a steadfast development agenda, a clear vision of increased transparency, and a keen understanding of what it takes to attract foreign investments to fuel the economy. Despite the massive obstructions that resulted from decades of corruption and malpractices, Modi began to deliver exactly what the country needed to launch itself on a renewed growth path.
It should surprise no one that Modi garnered significant support from the NRI community. With a renewed term in office, he can now take several steps towards replicating the development models that have helped developed countries to thrive.
The UAE accounts for the majority of inward remittances to India, out of which a significant share is into investments in equities and real estate. Modi 2.0 will certainly result in a significant increase in both these investment routes.
In real estate, NRI investors are taking their cue from the government’s primary focus — affordable housing. Apart from the fact that this segment is a highlight in Modi’s real estate agenda, it also delivers optimal rental yield and is the fastest “mover” on the resale market.
Shajai Jacob is CEO — GCC, Anarock Property Consultants.