Why Are Foreign Developers Eyeing HNIs and NRIs?

Foreign developers are increasingly catering to high net-worth Indians (HNIs) and Non-Resident Indians (NRIs). Now, the foreign developers showcase and market their properties in London, Dubai and in metropolises of India through exhibitions and roadshows. So, why do foreign developers eye HNIs and NRIs? Is investing abroad more lucrative than investing in real estate in India?

• The single biggest reason is, that HNIs and ultra HNI's invest more in real estate than the wealthy elsewhere across the world does. In London, for instance, Indians are among the top buyers of the most expensive properties. Many Indians buy homes in Dubai and western capitals, as an investment, for their children who study abroad, or to stay during their tenure abroad. Wealthy Indians invest not just in the residential property abroad, but also in the commercial, retail and industrial property.
• Investing in India forms an important part of emerging market strategies of large firms abroad. Many global firms invest over 20 per cent of the total capital they allocate for the developing world, to India. Dalian Wanda Group, one of China's largest real estate firms, for instance, will invest $ 10 billion in India in the next one decade in the retail assets and in the developing townships. Wealthy Indians, of course, reciprocate. In the US, the investments of Indians have grown from US $ 5.8 billion to 7.9 billion, from the fiscal; year 2013-2014 to the fiscal year 2014-15.
• Many wealthy Indians feel that the property in Mumbai and Delhi is very expensive, and often are priced in the same range of property in cities with much better amenities and infrastructure. Once we take these factors into account, property in large Indian cities would appear exceptionally over-priced. Moreover, cities like London and New York have a higher livability index.
• The investment climate in many foreign countries is more favourable to the real estate investors. India has more stringent regulations for real estate investment.
• The yield from investing in the real estate abroad is higher than the yield from investing in real estate in India. Even though the real estate prices appreciate greatly in India, for investors, yield matters almost as much.
• The Indian currency has been depreciating in the recent past. So, the nominal values of their real estate assets would have risen too. This would have tempted many Indian investors to buy real estate abroad.
• The Indian government raised the foreign exchange remittance limit from US $ 1, 25,000 to US $ 2, 50,000.

All these factors might have contributed in varying degrees to foreign developers and Indian real estate investors in being interested in each other.