NRIs living across the world have increased their appetite for investing in the country, encouraged by a clearer regulatory landscape, a firm argues.

A “trust deficit” that had opened between non-resident Indians (NRIs) and India’s private equity firms, but legislative changes have drawn in new investment flows, with NRI confidence ending 2017 on a high note, an industry figure says.

"Mid-2017 onwards, we are experiencing an investment revival amongst NRI's," Rahul Maroo, head of international sales, Omkar Realtors, said. His firm is based in Mumbai and concentrates on boutique and luxury housing, it says.

The rise in NRI interest has been driven by economic and regulatory reforms affecting the real estate market in India that started in the last quarter of 2016 and lasted through 2017, his firm said in a statement.

India, while in some ways still a relatively highly-protected market and not easy for foreigners to access, has seen changes under the current government. For example, it has seen the introduction of the Real Estate (Regulation and Development) Act, 2016 (RERA), Goods and Services Tax (GST), and the demonetisation and Benami Transactions (Prohibition) Amendment Act. (The later legislation relates to attempts to shift the country away from a cash-driven, unbanked economy.)

Omkar Realtors said that in the past, NRIs living in GCC countries and regions, Singapore, Hong Kong, UK, Canada and US preferred investing in India because of family links, higher returns, rental income and depreciation in the rupee’s exchange rate, which made Indian property attractive. However, the lack of regulatory mechanisms to safeguard against misleading marketing and ensuring adherence to delivery timelines deterred investor interest, it said. 

"Mid-2017 onwards, we are experiencing an investment revival amongst NRI's from the migrating faction as well the sizeable permanent population looking at India for investment. In two low-ticket offerings in Mumbai-based developments, we have added 300 customers this year from GCC, Singapore and Hong Kong markets," Maroo said.

Other organisations have said that the demonetisation drive and implementation of the real estate regulatory act (RERA) will help bolster confidence of non-resident Indians to invest in the Indian residential market, pushing the total investment from this segment to touch Rs 1,150 crore in the top eight cities this year (source: Hindustan Times, 24 January, 2017, quoting The Global Indian Fraternity, New Locomotive of Indian Real Estate by Square Yards.) The report said such an inflow is nearly double of NRI investments made in the country four years ago. 

Data shows that more than 20 per cent of NRI investment in Indian real estate comes from UAE, followed by US and Kingdom of Saudi Arabia. Other countries such as Canada, UK, Singapore and Australia are also a major source of NRI capital inflow in the Indian realty market.