Trump’s stern warning of potential retaliatory tariffs against India’s protectionist policies has ignited a debate about the broader impact on various sectors, particularly real estate. As the US President vows to rectify what he perceives as an unfair trade system, the ripples of his decisions are set to reach far beyond manufacturing and trade, touching the lives and investments of Non-Resident Indians (NRIs) both in the US and India.
At the heart of the matter lies the delicate balance of currency markets and investment sentiment. Historically, trade tensions have triggered fluctuations in the rupee’s value, and Trump’s proposed tariffs could exacerbate this trend. A weaker rupee, resulting from potential US retaliatory measures, would initially make Indian real estate more attractive to NRIs earning in dollars. Avneesh Sood, Director of Eros Group, cautions, “Currency fluctuations are a double-edged sword for NRIs looking at Indian real estate. While a weaker rupee initially makes property purchases attractive, sustained volatility can complicate profit repatriation and create an uncertain investment climate.”
Beyond currency concerns, the real estate sector braces for potential increases in construction costs. If India retaliates against Trump’s tariffs, raw materials like steel, aluminum, and imported electrical components could become more expensive. This escalation in input costs could lead to delays in under-construction projects and increased property prices, particularly in the luxury and high-end segments. NRIs investing in pre-launch or under-construction properties may face extended timelines and unexpected cost escalations, adding a layer of uncertainty to their investment decisions.
Trump’s protectionist stance could also reshape NRI investment strategies on a global scale. If the US administration introduces additional barriers for foreign buyers, such as increased taxation or stricter lending norms, NRIs who previously favored US properties might redirect their focus to India. Sood notes, “The easing of regulations such as the Real Estate (Regulation and Development) Act (RERA) and improved transparency in the market have already encouraged NRIs to reconsider India as a viable investment destination.”
Immigration policies under Trump add another dimension to NRI investment decisions. Stricter visa regulations, particularly for H-1B holders, have created uncertainty among Indian professionals in the US. If similar policies resurface, NRIs may accelerate their investments in India as a hedge against an unpredictable future in the US. For many, Indian real estate could emerge as a more stable long-term financial asset compared to a restrictive American property market.
Despite these challenges, India’s real estate sector boasts strong fundamentals that continue to draw NRI investors. The commercial real estate market, especially in tech hubs like Bengaluru, Hyderabad, and Pune, has thrived on the expansion of multinational corporations. However, economic uncertainty stemming from reciprocal tariffs could slow down these expansions, affecting demand for office spaces and rental growth. Conversely, the warehousing and industrial real estate segments might see a boost if companies shift supply chains to India to mitigate disruptions caused by tariffs on China.
Sood remains optimistic, stating, “The Indian real estate market has consistently evolved to accommodate global investment trends. Despite trade tensions, NRIs continue to see India as a high-growth market with strong returns, particularly in commercial real estate and emerging asset classes like REITs.”
As India and the US navigate this complex trade landscape, the Indian government may introduce policy incentives to bolster NRI investor confidence. Measures such as tax benefits on long-term real estate holdings, relaxed repatriation norms, and favorable mortgage options could offset trade-related disruptions. Additionally, if US investments in Indian commercial real estate decelerate due to tariff concerns, regulators might expand REIT participation for NRIs, ensuring steady capital inflows.
Shobhit Agarwal, MD & CEO of ANAROCK Capital, weighs in, “Should Trump’s tariffs be carried out, NRIs investing in Indian real estate could face the downside of higher costs of imported building supplies, impacting property values. Also, the tariffs could tax the Indian economy in general, influencing the stability of the real estate market. However, NRIs would gain from a stronger dollar, making investing in India more cost-effective. We don’t know much either way currently. NRIs should definitely stay current on the tariffs and evolving trade policies, and take their
