NRIs lack the confidence to invest in the Indian real estate market due to poor grievance redressal mechanism, confusion over GST, lack of incentives and low capital and rental returns
Despite a spate of structural reforms such as GST and RERA, NRIs still hesitate to invest in the property market back home due to reasons such as poor grievance redressal mechanism, confusion over GST, lack of incentives and low capital and rental returns, says a report.
As many as 62 percent are not ready to commit investing in the property market anytime soon. Nearly 84 percent are of the view that there is no incentive to invest back home, says the BrandX report 2017-2018 by Track2Realty, an independent real estate think tank.
While almost half are of the view that property prices are too high in India, 34 percent would still want to wait for the market to become more transparent. More than half maintain that it would take another 36 months for the property market to become transparent and lucrative for investment. As many as 26 percent say it would take another five years and only 16 percent are optimistic that the scenario may improve in the next one year, it says.
It is the implementation of reforms that deters NRIs from investing in real estate. As many as 68 percent are of the view that the grievance redressal mechanism in India is still not up to the mark and that it would still take years to get justice.
As many as 56 percent NRIs maintain that a listed real estate company provides no guarantee that it will protect consumer interests over a non-listed one, says the report.
High cost of properties deters as many as 40 percent NRIs from investing back home. For 38 percent it is the lack of appreciation potential and for 22 percent, it is low rental returns, the report says.
GST has further dampened their spirits and 70 percent of NRIs find it extremely confusing to calculate GST and stamp duty, the report says.
More than half (54 percent) rule out investing back home due to emotional connect. This is because the young NRIs (as many as 78 percent) have absolutely no emotional connect. It is only those in the age group of 50 years who may be driven to invest in India after retirement, says the report.
Neither does a weak rupee encourage NRIs to invest in India. As many as 72 percent have no hope that the rupee will become strong in the near future, says a report.
Neglible rental returns, safety, security and maintenance costs are other reasons that deter NRIs from investing in India.
As many as 68 percent NRIs are of the view that if some incentives such as opening up agricultural land, they may consider investing in India, says the report.
These findings are part of the global online and off-line survey conducted by Track2Realty. The sample included NRIs from the US, UK, Middle East, South Africa, Canada, Australia, New Zealand, Malaysia, Singapore and Mauritius.