NRIs shift capital to Indian financial assets as real estate demand cools

Non-residential Indians (NRIs) are diversifying capital away from traditional real estate toward fixed-income instruments and equity markets, following a shifts in tax regulations and higher domestic interest rates. Data from Indian financial consultancies indicates that while property retains a significant share of the NRI portfolio, the allocation to mutual funds and Portfolio Management Services (PMS) has increased by an estimated 15% over the last 12 months. Shift Toward Financial Assets The move is driven by the search for liquidity and higher yields as the Indian equity market continues to outperform global benchmarks. NRIs are increasingly opting for Systematic Investment Plans (SIPs) and National Pension System (NPS) accounts. On Thursday, 23 July, several major Indian banks reported a surge in Non-Resident External (NRE) fixed deposit volumes, attributed to competitive interest rates currently hovering between 7% and 7.5% for two-year tenures. Taxation remains a critical factor for the approximately 3.5 million NRIs living in the UAE. The implementation of the Liberalised Remittance Scheme (LRS) and changes to capital gains tax in recent Indian budgets have prompted investors to seek professional wealth management over direct property ownership, which often carries high maintenance costs and legal complexities. Impact on UAE Residents For UAE-based investors, the primary appeal of financial assets lies in the ease of repatriation. Unlike physical real estate, which…