The Importance of Market Research for NRIs Buying Luxury Property in India

Tired of having to stay at hotels on your trips to India? Then you might have already decided on buying a luxury property at a suitable location. But investing in such a property brings forth a lot of crucial aspects to ensure the utmost satisfaction.  Not all developers out there are worth your trust, you need to research thoroughly on the current real estate market to make a truly profitable choice. In this blog post, we will talk about how proper market research can help you land on the best property of your choice. 

Property Appreciation Trends

First and foremost, it’s important to study the rates of appreciation of property prices over the past 5-10 years at any point in time. This can help buyers make an estimate of the costs involved in the purchase and also the future valuation of the property after a definite time period.  A recent report by Knight Frank India revealed that luxury apartment sales for properties priced between Rs 2 crores and Rs 5 crores increased by as much as 400% from 2019 to 2924.  As for the key destinations which saw maximum luxury property sales, another research study revealed that as many as 52 properties in Mumbai were sold at more than Rs 40 crores each, which comprised 88% of the total sales of ultra-luxury properties across top cities in India. 

Factors Affecting Property Appreciation Rates

• Upcoming Infrastructure Projects (metro, expressways, IT parks): Infrastructural development always has a direct impact on real estate price appreciation. 

As new metro networks, roadways, and airports are built in any region, they become more well-connected to nearby cities and towns.  For instance, a 246-km stretch of the Delhi-Mumbai Expressway between Sohna and Dausa was inaugurated in 2023. This has led to a price increase of up to 60-70% for properties along the Sohna-Dausa section of the expressway and the Gurugram-Sohna elevated road.

• Government Policies & FDI Influence on Real Estate: Government policies are crucial to the appreciation of property prices since they influence the demand from buyers and the confidence of investors. 

For example, policies such as lower GST on housing and RERA regulations provide an impetus to buyers. Similarly, when rates of interest are low on home loans, mortgages become more affordable to buyers, boosting prices and demand. 

• Proximity to Business Districts & Economic Zones: Properties that are positioned close to financial centres, business districts and IT parks are likely to be valued higher than those further to such key areas.  

After all, renters, as well as home buyers, seek locations that decrease commuting times.  Read Also: What NRIs Need to Know About Luxury Property Appreciation in India 

Rental Yields in Premium Locations

NRIs also need to analyse the potential for rental yield in the locations that they’re considering for the property purchase. The major cities in India, namely Mumbai, Bangalore, Delhi, Pune, and Hyderabad have thriving markets for luxury real estate.  With advanced infrastructure, options for upscale housing, and a sound rental demand, such cities offer NRIs the opportunity to benefit from rising property prices and rental yields. Here are some valuable highlights of the rental demand in some key regions in these cities:

• Delhi: Delhi offers a diverse range of luxury properties that promise high rental yields, having registered an average yield of 7.17% as of Q3 2024. Noida and Gurgaon are the key regions that witness high demand for residential and commercial properties on rent. 
• Mumbai: Despite the high prices of properties in the city, it witnesses constant demand for real estate. Bandra and South Mumbai are some prime locations highly sought after by both property buyers and renters. 
• Pune: The city’s real estate market is driven by the thriving manufacturing and IT sectors, offering several upscale housing options that attract both commercial and residential investors. 
• Hyderabad: With an average rental yield of 5.21% recorded for Q3 2024, Hyderabad’s real estate scenario is as thriving as ever. Regions such as HITEC City and Gachibowli attract several IT professionals, leading to a sound demand for both commercial as well as residential properties. 
• Bangalore: With a healthy property appreciation rate similar to Hyderabad, this city, known as the Silicon Valley of India, attracts tech professionals from across the country. Notably, it sees robust demand for residential properties in regions like Electronic City and Whitefield.

Read Also: Benefits of Buying Luxury Property in India for Residency Purposes

Reputation of Developers & Projects

Why Invest in a Reputed Developer?

Here are the top reasons why you should consider a reputed real estate developer for buying a luxury property:

• Quality of Construction: Quality and safety are two important yardsticks for knowing whether the property is the right choice to go for. Reputed developers build long-lasting and reliable luxury properties designed with modern construction techniques, which are applied in both their exterior and interior parts. 

It’s best to compare and thoroughly research a few top companies and their properties to check if you’re on the right track. Note that developers who are recognised for their work understand the value of using the best quality materials, reflecting a commitment towards retaining trust and excellence. 

• Premium Amenities: Buying premium properties like riverside apartments or bungalows provides homeowners with top-notch amenities in bigger spaces. As such, you need to be sure that you’re getting amenities such as a wide balcony, a doorstop parking area, a jogging track, and a rooftop garden. 
• Timely Delivery: One of the primary reasons why you should opt for a reputed developer is the timeliness of delivery. You would never want delays in delivery and legal complications that may delay the completion.

For a reputed developer, the RERA guidelines are strictly followed, ensuring timely completion of the property. 

How to Evaluate a Luxury Real Estate Developer? 

• Past Project Quality & Delivery Timelines: If you have in mind the names of one or more developers to reach out to, you should research the quality and efficiency of their past projects. 

Log on to third-party real estate forums or gather testimonials for these projects, and note any references about the quality of construction and the adherence to timelines. You can then decide if the property is indeed worth your investment. 

• Financial Stability & Track Record of Developers: A publicly listed developer can provide you with proof of their sound financial health. You can also try gathering track records of their project deliveries in the past. Such information will help you a lot in figuring out their reliability. 
• RERA Registration & Approvals: You should also check if the project has proper building permits, fire safety certifications, and environmental clearances. Additionally, a project certified by RERA suggests that the developer is being transparent about the timelines, penalties for any delay, and specifications. 

Conclusion

Besides being a place where you can relax and unwind, your luxury home will also be a lucrative investment for your future. So, make sure to cover all the aspects of research that we’ve discussed before you make the move.  At Rustomjee, we offer a range of luxury residential projects at premium locations in Mumbai. At the same time, we safeguard the interests of our NRI buyers at every step of owning their dream property in India. To know more about our projects, reach out to us today. 

FAQs

• What is the rate of taxation for NRIs on rental income from Indian properties?

NRIs are taxed at a flat 30% on rental income from Indian properties, plus applicable cess and surcharge. They can deduct municipal taxes and claim a 30% standard deduction under Section 24 for maintenance. TDS at 30% is deducted at source under Section 195 before the rent is credited to the NRI’s account.

• What are the challenges that NRIs might face while investing in real estate?

NRIs might face challenges such as managing the property’s affairs remotely, navigating legal complications, and landing on reliable tenants. NRIs should consider hiring a property management service or taking the help of a relative or trusted friend in India. 

• Which accounts can be used by NRIs for transactions relating to properties?

NRIs can invest in properties through funds received from banking channels or those held in Foreign Currency Non-Resident (FCNR), Non-Resident Ordinary (NRO), or Non-Resident External (NRE) accounts.