Why Pune is the preferred property destination for NRIs
Kishor Pate of Amit Enterprises Housing explains the reasons why Pune has become the hot favourite for non resident Indians to invest in properties.
Amit Enterprises Housing
There has been a decisive resurgence of interest by NRIs in Pune’s property investments. The scale of rise has not been spectacular, but does indicate the return of NRI investors’ confidence.
NRI property investors tend to stay away from unfamiliar, historically over-speculative cities and focus on either on their cities of origin or on those that offer assured and stable returns on investment. The fact that Pune, with over 210 software companies, has overtaken even Bangalore in terms of IT-driven demand for residential properties has stood in the city's favour.
Also read: Find out: Legal aspects for NRIs selling property in India
Naturally, NRIs prefer to invest in residential in Pune that can earn them handsome rental returns and will also appreciate for eventual resale. They are showing a lot of demand for luxury homes as well as higher mid-income residences in the price range of Rs 65 lakh to Rs 3.5 crore and above.
There is considerable interest in under-construction residential projects nearing completion, since these are available at lower rates. NRI property investors who are focused on rental income are on the look-out for projects in areas with sustainable demand from potential tenants.
In commercial properties, NRI investors looking at the Pune real estate market look for projects by reputed developers which are fully or almost fully leased out.
Their investment appetite in this segment ranges between Rs 5-30 crore. Despite Pune's burgeoning retail sector, NRIs are largely staying away from investments in retail projects as there far too much supply on the market. This makes investing in retail properties unattractive to them.
Challenges NRI Investors Face
Apart from a generic understanding, NRIs tend to be out of touch with Pune's real estate market. Therefore, they are not attuned to what locations and typologies work best for residential property investment.
There is a lot of investigation required on the ground before a residential property investment becomes viable - especially in large-ticket assets. Also, the previous route of buying a property by 'remote control' via a power of attorney has now been closed.
The NRI modus operandi
NRIs who are currently abroad therefore ask their relatives or close associates in Pune to co-ordinate with reputed developers and also brokerages. Most NRIs focused on Pune property will visit the city during the festive season to finalize the property and conclude the transactions.
However, it should not be assumed that NRI property buyers are entirely clueless. In fact, they are extremely discerning. The fact that they have been exposed to the transparency of real estate markets in developed nations understandably raises their expectations in term of value for money, construction quality, facilities and amenities offered, and overall transparency.
Contrary to commonly held belief, most NRI property investors looking at Pune are aware that expecting substantial short-term gains on their investments is unrealistic. They are not 'quick buck' hunters, but rather serious portfolio players.
The author is the CMD of Amit Enterprises Housing Ltd.