What Homes Will NRIs Buy in 2023?
by Akash Pharande, Managing Director - Pharande Spaces
NRIs are rightly seen as one of the most important buyer and investor segments in Indian residential real estate. They have always wielded considerable clout in the Indian housing market, but never more so than in the last three years. Many Indian are now returning home from their postings abroad, and NRI investors with no immediate plans are well aware of how lucrative residential property has become since 2020.
A forecast issued by international property consultants JLL pegged the growth of the Indian real estate market at 12% – from $13 billion to $15 billion – in FY22. The consultants go on to state that NRI investors eyeing property in India will need to make timely moves if they want to cash in on the opportunity to turn their funds into lucrative investments.
By all accounts, this is certainly happening and developers take non-resident Indian homebuyers very seriously. NRIs are important because most do not come to the housing market as window shoppers but as serious buyers. Their business will have considerable weightage in 2023. As such, it pays to understand what NRI homebuyers and property investors will be looking for in the upcoming year – and why.
The NRI Property Buyer
In previous years, many developers launched and marketed exclusive ‘NRI projects’. The marketing concept was two-fold. On the one hand, NRIs were to believe that the project was a ‘tailored neighborhood’ in which only NRIs could buy homes. On the other hand, resident Indians who could buy a house there should consider themselves fortunate to have such high-profiled neighbours and not look too closely at the price tag or actual value proposition.
Such projects were usually heavily overpriced, and their marketing rested on the assumption that ‘disconnected’ but cash-rich NRIs were ignorant about what was happening in the Indian housing market.
Another presumption was that NRIs have ‘more refined’ tastes than Indians back home – completely missing that a lot of resident Indians who can afford to buy mid-income range homes also travel the world and are well acquainted with housing trends in other countries.
Justifiably, the concept of ‘NRI projects’ failed. This marketing gimmick that attempted to play on aspiration and lack of awareness died a natural death with the emergence of the Internet as the preferred property search and marketing tool of a new age.
Today, NRIs are young – predominantly tech-savvy millennials – and very much clued into the housing market back home. They can see through gimmicks and know what to look for. NRIs will drive a big chunk of housing sales in 2023; so, what are they looking for? Really nothing more or less than every other Indian.
The NRI Wish-list
Contrary to the incredible marketing gimmicks of yesteryears, NRIs share the same wish list in housing that discerning Indian homebuyers have. If they look for a more globally-aligned lifestyle, then not more so than the tech-savvy, well-informed homebuyers back home.
NRIs buying properties back home do so for one of two reasons:
- As an investment for capital appreciation or rental income – in which case, future buyers and current tenants are Indians with needs and expectations specific to India
- For their personal use once they return to India – in short, to live as Indians in India, with the same lifestyle expectations and local requirements.
This is not to say that their expectations have not changed, especially in the past 2.5 years. The Covid-19 pandemic was a wake-up call for all Indian homebuyers, resident or nonresident alike and affected NRI homebuying choices. The perception of housing has fundamentally changed. Homes are no longer just where the heart lives but where health, safety, and wellbeing live – and, in many cases, where work takes place. In 2022, NRIs were buying bigger, better homes in bigger, better projects. This trend will continue in 2023.
NRIs are not looking for the lowest price points, but the most spacious, safest, most comfortable, and most suitably located homes that their money can buy. What does this mean?
Larger Spaces for Work and Life
Many NRIs returning from abroad have remote work arrangements with their companies and require home offices. Those buying homes for investment know that India has accepted remote and hybrid work and that tenants and future buyers will expect a home office space.
According to a recent consumer sentiment survey by real estate consultants Anarock, 77% of the NRIs who participated in the poll stated a marked preference for bigger houses, with 23% looking to buy 4BHK flats. The survey received responses from NRIs currently living in the United States, Canada, various European countries, the Gulf countries, and various Asian countries.
Smart Home Features
The pandemic put the limelight on enabling technologies, including smart home features. However, while smart home features were primarily seen through the lens of increased comfort in the past, today they are also evaluated on the scales of safety and efficiency. Truly smart homes require less human intervention and support to run efficiently. This is still considered important at a time when memory of the destructive power of airborne viruses is still fresh.
Health-centric Amenities and Facilities
Space is the one thing that NRIs became accustomed to abroad that cannot be taken for granted in this crowded country. Space is the ultimate luxury in India, not only within our homes but also around them. The possibility of going for a bracing walk or jog, or pursue a sport in spacious, uncrowded surroundings is a must-have for NRIs. Green open spaces and well-managed roads with sidewalks figure unfailingly on every NRI’s wish list.
A gymnasium on the premises used to be a take-it-or-leave-it feature in previous years. No longer. Working out in an unsecured public gym just a couple of years after public gyms were closed for obvious reasons is now unthinkable. Likewise, a hospital with a fully equipped emergency room nearby is not negotiable. Never has the possibility of timely medical attention become such a vital focus area than today.
In post-pandemic times, the daily commute is still seen as Public Enemy #1, and not just for working individuals. The safety of their children, regardless of age or current educational level, is a paramount concern for NRIs. Their regular trips to and from their education premises must be as short and secure as possible.
Post-Covid-19, the desirability of a neighbourhood is directly proportional to how many conveniences can be accessed without breaking a sweat or burning hours and a tankful of petrol. Depending on where they live in a foreign country, many NRIs have benefited from a proactive local government to ensure a regular supply of groceries and daily staples to their homes.
This assurance is obviously not a given in India. Walkable distances are therefore a strong ask with NRIs. They want to know what retail outlets and other day-to-day services are available in or near the project. Those looking at luxury homes will expect a well-oiled concierge service to be available.
When it comes to how NRIs tackle the matter of property prices today, I am often reminded of a particular elite neighborhood in Pune that began attracting many foreigners many years ago. For a couple of years, hawkers, rickshaw drivers, and high street retailers experimented with hugely inflated rates and prices aimed squarely at these visitors to our country. Two luxury malls were set up to market haute couture apparel and other overpriced products to them.
Quite aware that they were being fleeced, these foreigners quickly educated themselves on the price of everything from water bottles to auto fares – and flatly refused to pay extra. They snubbed the malls, obviously set up solely to pull money out of their wallets, and bought local produce and goods. With some exceptions – for instance, in the case of cuisine – they were not here to live like foreigners but to participate in everyday Indian life on equal terms.
Before too long, MRP meant precisely that and no more. Along similar lines, NRIs will not pay ridiculous prices for the homes they buy in India. That said, just as resident Indian homebuyers, they are willing to pay for exceptional value. Most NRIs prefer branded builders with strong reputations for quality and after-sales service.
They do extensive online research before visiting sites in India and will inspect every project that offers what they want within their budgets. There is no element of impulse buying. They ask focused questions and expect no-nonsense, verifiable answers.
Integrated Townships – NRIs’ First Preference
Looking at the qualities NRI homebuyers and investors seek in the many Indian housing options before them, it stands to reason that integrated townships have a clear edge over other projects on the market. They are the closest that the Indian residential real estate experience can come to the orderly, enabled, and dependable lifestyle of a Western city.
While none of our cities can offer such an experience across the board, integrated townships provide a generous slice of such a life. NRIs and resident Indians alike are making a conscious decision to choose quality of life above all other considerations. In the mid-to-upper-income segments of homebuyers, nobody is bargain-hunting when it comes to getting the right home.
After almost three precarious years of unknowns, there can be no room for uncertainty or compromise. And one thing has definitely not changed for NRI homebuyers – they still expect the best.