Stock - India property
Along with resident Indians, NRI buyers from the UAE, Gulf and elsewhere have fuelled the big India property boom. Image Credit: Shutterstock

Dubai: Indians – residents and NRIs alike – are buying up property. And they are not prepared to wait.

It doesn’t matter whether mortgage rates are high, property values are gaining by 9-10 per cent, and the job market still has some way to go before it can reach relative stability. When it comes to buying a home (or any other sort of real estate asset that catches their interest, Indians are buying for the moment.

They have been helped by the Reserve Bank of India (RBI) no raising the interest rate for a second successive time, meaning that mortgage buyers will not be feeling a bigger pinch. That too is good enough.

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This demand will come to the fore again as the ‘India Property Show’ opens today (June 10) at the Dubai World Trade centre, and organised by Maxpo Exhibitions. Real estate from 50 Indian cities will be represented at the event, as developers in India work on new ways to get NRIs from the Gulf to buy a home – whether it’s their first or one of more.

Non-Resident Indians from the UAE and Gulf are piling in big-time. Data from Anarock, one of the biggest names in the Indian property consultancy space, finds a 15-20 per cent increase in demand among NRIs for property in India during the first three months of 2023. Keep in mind this double-digit showing comes on top of an already big round of buying by expat Indians all through 2022.

In any quarter, property buys by NRIs make up 10-15 per cent of overall India-wide sales.

NRIs’ preferences?

“The IT hubs of Bengaluru (24 per cent) and Pune (19 per cent) are seeing the highest NRI demand, followed by Delhi-NCR,” said Anuj Puri, Chairman of Anarock Group.

Collectively, these two IT cities saw 107,000 homes sold in 2022 - accounting for 29 per cent sales share among the top 7 cities.

- Anuj Puri

The NRI pricing preference

More than of 75 per cent of NRI respondents had a preference for homes of Rs900,000 and plus. Of this. The sweetest price spot among these buyers – making up 47 per cent in the Anarock survey - are homes of Rs900,000-Rs1.5 million, with 21 per cent likely to opt for properties valued at Rs15 million to Rs25 million. And 10 per cent wanted to spend more than Rs25 million.

Stock - India property
Bengaluru and Hyderabad property markets are in the midst of a development surge. NRI buyers are tuned in for any opportunity, ready or being built, in these cities. And elsewhere too. Image Credit: Bloomberg

The sub-Rs800,000 home demand

Demand is filtering across into lower price points too.

“The mid-segment housing - of Rs400,000–Rs800,000 - have dominated recent developer launches,” said Inayat Sait, Chairman of Maxpo Exhibitions. “Demand from returning NRIs is also up from countries like Singapore, due to fierce competition from Chinese investors in Hong Kong, and the shrinking savings potential for many of Indians migrants who went in search of greener pastures.”

One housing category that is yet to deliver to its full potential is affordable homes. That’s more to do with the high cost of land and of construction.

Today, the standard construction is Rs3,200 per square foot depending on the city

- Inayat Sait

“That for luxury housing, the construction cost is Rs4,500 psf and above depending on the specs.”

Everyone’s buying

There is a lot of FoMO (fear of missing out) vibe anchoring the ongoing property buying spree in India. In a way, the rate hikes since early last year pushed many buyers to commit rather than keep holding back awaiting whatever turn in the property market they wanted to see.

Then there was the India economy ticking along fairly nicely after the succession of shocks brought on by the pandemic.

This is the space that NRIs ventured into when they swung into action buying property – often at distressed prices – during late 2021. “Those who got in early got themselves the best deals,” said a developer. “Now, it’s more balanced, property values are gaining, but developers have not added too high a premium.”

All the major cities have seen a depletion of ready homes for sale. This is why developers are in a hurry to launch and catch the rest of the buying action.

“Market reports indicate that the inventory of ready-to-move-in homes is at an all-time low,” said Dr. Niranjan Hiranandani, Managing Director of Mumbai-based Hiranandani Group and National Vice-Chairman of the industry grouping Naredco.

The strong demand comes despite the withdrawal of fiscal stimuli such as stamp duty waivers, coupled with high-interest rates and property prices.

- Niranjan Hiranandani

“The strong demand comes despite withdrawal of fiscal stimulus such as stamp duty waivers, coupled with high interest rates and property prices. Despite volatile times, real estate assets have once again emerged as an attractive investment choice.

“Developers are gearing up for new launches, enabling them to take advantage of improved market liquidity and a variety of opportunities throughout the real estate market.”

India’s top-performing real estate spots

By a distance, the Mumbai Metropolitan Region (MMR) and Delhi’s National Capital Region were at the top of the in-demand places. The third-best performer was Pune during Q1-2023.
And among the others?

Hyderabad. “Post-Covid, the city has seen remarkable growth both in terms of new supply and housing sales,” said Puri.

“Interestingly, property prices have also headed north owing to high demand and the fact that there was scope for price growth here unlike most other top cities.

“Among the Top 7 cities, average prices in Hyderabad are the least along with Kolkata.

“Average home prices in Hyderabad stand at Rs4,800 per square feet. Kolkata has the same average prices.
“This effectively means that home buying in the city is still far more affordable than in Bengaluru, Chennai, Pune, among others.”

It’s all showing in the numbers

Even with the round of rate hikes in the early part of this year, Anarock Group’s data show the ‘bull run in the residential market continued’ in Q1-2023. “In terms of new supply, Q1-2023 was the second best for new launched since 2015 - around 110,000 units were launched in India’s Top 7 cities,” said Puri.