According to a survey, 53% of NRI investors choose CRE as their preferred investment vehicle over ETFs (21%) and Mutual Funds (19%), as the average ticket size is higher for an NRI at ₹ 38 lakh as compared to residents CRE investors. About 82% of NRI investors did not make upfront investments in India due to accessibility issues, lack of transparency, and lack of trust, according to the survey.
Millennial investors are increasingly investing in Indian commercial real estate, as 53% of NRI investors are millennials, according to a Neorealty survey by MYRE Capital that evaluated approximately 5,000 NRI's investment appetite in 13 countries.
Bangalore, Mumbai, and Pune are among the top three investment hubs among NRIs, office space remain the most desirable asset and school space is emerging as a new CRE investment. Growth drivers for NRI investors' commercial real estate (CRE) include passive family income, portfolio diversification, lack of other safe alternatives, and tax-efficient returns.
Investors from Bangalore and Mumbai (45% of respondents combined) have shown a geographical interest in investing in their cities. Bangalore was home to India's major IT corridors and provided office space to some of the major multinational corporations. Given the pandemic, global companies are accelerating the transition from processes to a more digital approach.
Bangalore, the world's IT/ITEs capital, is experiencing increasing demand from multinational companies and has been able to sustain market growth while maintaining single-digit vacancies.
"Millennials and high-paid senior professionals make up most of these NRI investors, so they tend to invest in fractional CREs, which are much easier to manage than other forms of traditional real estate ownership," Vir said. The report also shows challenges for NRI investors when investing in CRE (asset management, tenant management, legal due diligence, asset identification, asset management, etc.).