Indian non-resident Salman Qureshi, who resides in Dubai, purchased his property for Rs 11 crore in 2017 and sold it a month ago for Rs 13.5 crore.
“The way property prices are rising in Dubai, I should have waited for some more years to get at least 40 percent return,” Qureshi stated. Given the state of the economy and the unpredictability of the West Asian region, he is now considering making an investment in a house in Bengaluru.
The major regional equities gauges plunged in the first week of October following the start of the Israel-Hamas war. The benchmark TA-35 stock index in Israel saw its largest loss in over three years, falling 7%, leading the way, according to Bloomberg.
According to experts, the erratic state of the market combined with rising real estate values may encourage NRI investments from Dubai in Indian cities like Bengaluru, Pune, and Hyderabad. Nevertheless, the conversion rate has decreased due to the impending general elections in 2024 and growing real estate costs, despite a spike in demand from NRI investors.
Impact of war
The United Arab Emirates, including Dubai, and Western nations like the US and the UK are the main sources of NRI investments in Bengaluru, according to Ashish Sharma, city head for Bengaluru at the ANAROCK Group.
According to data from Knight Frank India, $565 million in investments from Dubai reached India in 2018, bringing the total amount invested there to $2.7 billion between 2018 and 2022.
Currently, about 90% of our NRI clients are searching for capital protection. Following the Russia-Ukraine war, places like Dubai and Bahrain became popular NRI investment destinations, according to Balaji Badrinath, managing partner of the local Coldwell Banker real estate consulting office. “However, based on our most recent inquiries, more people are looking to shift investments to India, at least 15 percent, now that there is more conflict in the region.”
Experts claimed that compared to the US and European markets, as well as the war-torn West Asian region, the buoyancy of the Indian market offers superior capital protection.
Senior director at Jones Lang LaSalle Ritesh Mehta stated that the Indian micro markets provide encouraging signs for long-term investment.
“In Bengaluru, NRIs who are looking to switch will invest between Rs 80 lakh and Rs 1 crore; in Dubai, they would invest between Rs 2-4 crore,” he stated. The capital appreciation in Bengaluru would be 8–12% YoY, while in Dubai, it would be roughly 12–15% YoY. “Rental yields in Dubai (8 percent YoY) would be higher than, say, in Bengaluru (3–3.5 percent YoY).”
Dubai’s real estate market is still expanding.
Property Junction analyst Vijay Sawlani reports that prices in Dubai have gone up by 15–18% over the past six months, and in some desired downtown homes, by 30%.
According to experts, prices will only climb as more foreign investors visit Dubai.
A typical one-bedroom apartment will cost between Rs 1.5 and Rs 1.8 crore, according to Sawlani. A two-bedroom apartment will set you back anywhere from Rs 2.5 crore to Rs 10 crore. Hamas conflict
“For the same person investing for a 2BHK in a good location in Bengaluru would have to invest a minimum of Rs 80 lakh to Rs 1 crore and can go up accordingly,” he said.
NRIs are wary
The demand from NRIs in Bengaluru increased by 10-15% in the first nine months of 2023 compared to the same time in 2022, according to statistics from the ANAROCK Group. Local brokers did note that while the number of requests has increased, the rate of conversion has decreased.
According to Amit Goenka, managing director of Nisus Finance, the percentage of NRI investments converted to cash in Bengaluru has decreased from 8–9% to 5–6% over the previous year. Hamas conflict
“Since last year, the capital prices in Bengaluru, particularly in the best locations, have increased by at least 20–30 percent. It might therefore only develop by 10–15% further throughout the following three to five years. Many NRIs have entered a “wait-and-watch mode” as a result of this and the 2024 Indian general elections, according to Kiran Kumar, vice president of Bengaluru-based Hanu Reddy Realty.
NRI investments are still slack in Bengaluru despite ongoing demand. Hamas conflict
“After a significant IT slowdown at the beginning of the year, job cuts are still occurring in areas like Bengaluru. Over the past few quarters, there has been a decline in the overall conversion rates of NRI investments relative to demand. Nevertheless, in spite of worldwide headwinds, it won’t slow down anymore “Goenka continued.
