Bengaluru, Mumbai, Pune top three cities for NRI investments: Survey
Millennial investors, known for their higher risk appetite and asset-light financial approach, are increasingly investing in Indian commercial real estate.
Bengaluru: Millennial investors, known for their higher risk appetite and asset-light financial approach, are increasingly investing in Indian commercial real estate. 53% of NRI investors are millennials, reveals the second edition of Neo-realty Survey by MYRE Capital which assessed the investment appetite of around 5,000 NRIs across 13 countries. Commercial Real Estate (CRE) growth drivers for NRI investors include passive income for family, portfolio diversification, lack of other safe alternatives, tax-efficient returns among others. Properties in Bengaluru, Mumbai, Pune are the top three investment hubs for NRIs wherein office spaces remain the most sought-after asset and school spaces emerge as a new CRE asset.
According to the survey, a whopping 53% of the NRI investors choose CRE as their favourite investment vehicle over ETFs (21%), Mutual Funds (19%), etc. with the average ticket size for an NRI being higher, at Rs 38 lakh as compared to a resident CRE investor. Interestingly, 82% of the NRI investors did not have any previous investments in India, owing to the accessibility issues, lack of transparency and trust.
The convincing factors to begin their first Indian investment in CRE have been the transparency, competitive returns, tech enabled experience (including virtual tours for investors who can't visit the property, digital on-boarding and performance tracking, real time updates, etc.), and end-to-end asset management. This makes it as easy as investing in a mutual fund for NRI investors with all the overhead management being taken care of by a dedicated professional team at MYRE Capital.
MYRE Capital's first edition of the survey in 2021 had revealed that more CAs and lawyers in India aspire to invest in CRE. However, the second edition's NRI investor profile shows a broader investor base with increasing traction and participation from engineers, tech experts, and consultants. This can be validated by increasing demand and salary structure for tech and consultancy jobs outside India, giving more disposable income at the hands of these professionals.
Originally hailing from Bengaluru and Mumbai (a combined 45% of the respondents), investors have shown a geographical interest in investing in cities they belonged to. Bengaluru has been home to India's largest IT corridor providing office spaces for some of the leading MNCs - given the pandemic, globally firms are accelerating the transition of processes to a more digital oriented approach. Bengaluru being the IT/ITES capital of the world, has witnessed continued increasing demand from MNC's and has been able to sustain market growth whilst keeping vacancies in single digits.
The latest opportunity on the MYRE platform, Vaishnavi Tech Park, was situated in the ORR micro-market of Bengaluru, the largest IT/ITES Corridor of the city which is the preferred location for MNC and blue chip tenants. This opportunity witnessed 47% of the aggregate interest stemming from NRI's of which 32% was from Bengaluru originated NRI's.
MYRE Capital's Founder and CEO, Aryaman Vir said, "We conducted this survey to understand if the new-age investor faced the same entry barrier as the GenX investor. We were pleasantly surprised to find that investors are now keen on investing in assets such as office space, student housing, and schools. 40% of our NRI user base are women, we believe increasing awareness and access to Grade-A properties will make more NRIs explore this asset class." "Since millennials and high salaried senior professionals comprise a large subset of these NRI investors, there is a natural inclination to invest in fractional CRE which is very easy to manage versus any other form of traditional real estate ownership. The survey also reveals that there continue to be challenges in investing in CRE for NRI investors (property management, tenant management, legal diligence, asset identification, asset management, etc.). This is the gap that we are trying to bridge using technology and a futuristic investment platform. Our vision is to build a platform focused on expertise, transparency, and trust for investors to facilitate real estate investments in institutional grade opportunities - this will enable us to democratize a traditionally antiquated asset class and hence reposition Indian CRE on a global platform," added Aryaman.