In the last two months, there has been a significant jump in the number of Non-Resident Indians -- including those spearheading the motel business in the US -- buying real-estate properties in GIFT City in Gujarat, say real-estate developers.

“Before December 2023, about 15-17 per cent of the bookings in GIFT City used to come from NRIs. This used to be purely for investment purposes. Now, there has been a massive uptake of real-estate by NRIs and the percentage of NRI bookings in our projects has jumped to 35-37 per cent. This (easing of liquor laws) was the last piece of the missing jigsaw at GIFT City,” said Deep Vadodaria, CEO of Nila Spaces.

“In the last one year, the real-estate market in GIFT City has appreciated between 40-60 per cent. A similar kind of return trajectory is not possible anywhere else in the world. NRIs outside India are making modest returns on their investments because of low interest rates. So they will continue to look for greener pastures,” Vadodaria added. He felt that poor interest rates in their respective countries are attracting them to GIFT City, where they could expect to secure their capital, and also get a return on their investments, despite a depreciating rupee. 

GIFT City largely has two investment sources -- one, the SEZ area, and the other the Domestic Tariff Area. “In the SEZ area of the project, the exit horizon is much longer and investments are large. That is where the fixed returns of a minimum of nine per cent (year-on-year) makes sense to NRIs, where they get a premium at the end. In the DTA, the investments are smaller and are usually backed by a bank-loan,” Vadodaria said.

Nila Space is not an isolated case. Both the Shivalik and Shilp Groups see similar trends in their real-estate projects. “Due to the prevailing financial condition in the US, many of those operating motels there are looking to divert 20 per cent of their funds to GIFT City. I met  four such businessmen and three of them owned motels in the US. Each owned between 10-30 motels. These motel owners have already made small investments in our projects, but now they are looking to park Rs 500 crore in our residential and commercial projects at GIFT City,” said Taral Shah, Managing Director of Shivalik Group, which is building residential and commercial projects in GIFT City at Gandhinagar.

One of the largest real-estate developers in GIFT City says investors from the US, the UK, Dubai and Africa are trooping to GIFT City, looking to make an outright purchase. “A majority of those who invest in our projects at GIFT City are from Gujarat. However, there is an increasing segment of Non-Resident Indians (NRIs) who are buying properties. These NRIs currently form 20 per cent of our investor base. GIFT City is developing at a fast pace and the project is expected to grow exponentially for the next five years. So the interest we see is largely those looking to make a quick profit in the shortest possible time,” says Yash Bhrambhatt, founder of Shilp Group.

Real-estate consultants point out that real-estate prices in GIFT City have risen by over 45 per cent within 1.5 years. “A square foot of residential property at GIFT City sells at Rs 8,000, against Rs 5,500 about two years ago,” says Jigar Mota, head of transactions (Gujarat) for global consultants, Cushman and Wakefield (C&W). 

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