years have witnessed an increasing trend of NRI investment in India.
According to Liases Foras, a real estate research company, a major share of real
estate investment in India comes from the UAE (20%), the US (18%), the UK (7%) and
Canada (6%). This can be due to factors like chances of earning high rental
income increased affordability given by their high-paying jobs, or a yearning
for their place when they settle down in India.
trend is further boosted by the ideal investment conditions in India.
Depreciating rupee value against foreign currency increases buying capacity; in
other words, it gets more square foot for its value. Moreover, implementation
of RERA and GST have also fostered transparency and rekindled NRIs’ interest to
explore property investment in India.
Cities that attract real estate investments in India
the Foreign Exchange Management Act (FEMA), NRIs cannot buy agricultural,
farmhouse or plantation land in India. This has opened a huge market in the
commercial and residential sectors, especially in cities. Cities also offer
gated communities and independent villas with world-class amenities that NRIs
prefer; they provide a better quality of life. Since cities also provide the
necessary job opportunities, it’s only natural that NRIs show interest in
buying a house in cities.
a decade ago, realty investors focused on major cities in the North and West of
India. With the recent high prices in cities like Mumbai and Delhi, the focus
has come further down. The booming IT sector also factored this shift. When it
comes to South India, Chennai and Bangalore vie for the best city for real
estate investment. Both the cities have made its way to Forbes’ ”Next Decade’s
Real estate situation
Both Bangalore and Chennai
real estate are driven by the demands of
end-users. Real estate investment in Bangalore has carved its place in
the list of the best investment options with the city’s IT sector and job opportunities. However,
Bangalore has a mature real estate market because the real estate boom happened
at least a decade preceding that of Chennai. While Bangalore still ranks top in
the absorption of commercial spaces, Chennai has a higher absorption of
residential property units.
estate investment in Chennai
is also in good shape as property rates are more
realistic and affordable here than in Bangalore with high returns on
investment. With more and more people relocating to this city of opportunities,
demands increase in these affordable micro markets. When demand increases,
rental rates are becoming higher. This is particularly beneficial for the NRIs
who wish to rent out their houses. When they
buy a property in Chennai, the value will
appreciate multiple times in terms of rental incomes and from a selling
perspective. According to Anarock research, 68% of people buy properties to
resell after appreciation. Since properties in Chennai have high resale value,
if NRIs do not wish to settle down in Chennai, they can sell off the property
and enjoy high returns on investment. For the financial year 2018-19, the
National Housing Bank studied the prices of under-construction properties. The
numbers show that the Housing Price Index of under-construction properties in Chennai
was growing at the rate of 3 percent followed by Bangalore (1%).
Future in two cities
Bangalore is characterized by constant IT growth and steady job opportunities,
Chennai has a mix of manufacturing and service sectors. These sectors witness
rapid growth and also attract huge investments. Recently, the Chennai Metropolitan Development
Authority (CMDA) has fixed the floor space index as 2.0 that promises 33% more
vertical growth in the city. In the Second Master Plan for Chennai Metropolitan
area, CMDA has allocated 33% of the land within the city for residential
development. These changes promise a huge boom in the residential sector.
housing prices in Bangalore are driven by amenities and the size of the house,
location primarily determines housing prices in Chennai. Since there is more
and more land made available in the suburbs, it’s easier to find houses than in
Bangalore. The prices of apartments in Sholinganallur, Thalambur, Tambaram, Guduvanchery, Valasaravakkam and
Sriperumbudur will grow exponentially in the coming years. Properties in these
areas offer a perfect mix of luxury and affordable properties at cheaper
prices. The proposed infrastructure upgrade in the transport corridor in OMR
and the construction of the phase-2 project of Chennai metro will give a
facelift to the real estate in these areas.
In the coming years, a large scale migration to the suburbs of Chennai and IT/ITeS corridor is imminent. With growing demand in
these fast-growing suburbs, the residential market will boom. The upcoming
infrastructural facilities proposed by the Government also signal a great
growth potential making Chennai a smarter option to invest.