As mentioned in some of our earlier blog posts, NRIs are now turning their long held aspirations of owning real estate in India, into reality. India’s growth story continues to fascinate NRIs across the world and many avenues are being created as well as schemes being fashioned for NRI/PIO/OCIs to bring in maximum investment from abroad.
Below is a quick overview on developments that have led to the increasing interest and inflow of retail investments from the Indian community in US, UK, Middle East, Africa and other countries with a sizable Indian settlement.
- All persons residing outside India holding Indian passports and also people of Indian origin have been granted permission by the Reserve Bank of India (RBI) to invest in both residential and commercial properties in India.
- The government including RBI and Foreign Exchange Management Act (FEMA) has liberalized the rules and regulations for the NRIs to make investment in real estate. Liberalization along with the added advantage of repatriation of the capital invested and even the rental proceeds under the circumstances prescribed by RBI have also encouraged NRI investments in real estate. Capital gains can be taken back after paying capital gains tax.
- Apart from India being a safe destination, 20% returns on the investments can be safely assumed and many a times, returns of upto 50% are also practically assured.
- To an NRI, a base in the homeland also brings with it a sense of security. The number of NRIs who are investing in property for sentimental reasons and for better investment returns is quickly multiplying.
- As opposed to earlier times when an NRI had to struggle with Municipal rules, income tax and wealth tax issues, succession legislations for all religions, the Hindu joint family Act, land ceilings and others, these are times that have NRIs being welcomed with a red carpet. The flexibility in rules has elicited an extraordinary response from the NRI community.
- The NRI investor can raise finances from financial institutions to purchase a residential asset. The Housing Development and Finance Corporation (HDFC) and other financial institutions in India are facilitating the NRI investment in property speedily and efficiently. NRIs are also considered safe for availing a home loan in India facility to purchase a property in India as they are prompt on repayment. The repayment of the home loan can be made through a normal banking channel by way of inward remittance. For those who earn an income in India through rent, dividends, pension, etc the loan can be repaid by way of direct debit into the accounts of Non-Residents External [NRE] or Non-Resident Ordinary [NRO] accounts.
- Professionals have been suitably empowered to deal with the matter of remittances. NRIs are free to repatriate in foreign currency their current earnings in India such as rent, dividend, pension, interest and the like based on appropriate certification.
- Online NRI banking in India and these accounts for NRIs have made life much easier for transactions involved in NRI investment in India.
- What has also made NRIs flock to India has been the initiative by builders and real estate dealers to ensure transparency about the projects on offer and fairness in dealings. NRIs consider their investments to be safe and rewarding when they park their money in real estate India.
The Path Ahead
The Indian real estate developers are leaving no stone unturned in tapping the overseas markets. High-quality construction in India is attracting huge NRI investment in real estate.
NRIs are welcome to participate in real estate investments by way of investments in the construction of residential and commercial projects, SEZs and infrastructural facilities The pan Indian interest in property buying has spawned a new league of businessmen who pitch in for tracking and tracing of property and offer customized investor services to NRIs.
On the anvil is a single-window investment promotion council planned by the government, which will undertake investment promotional activity. This will involve making extensive contacts with potential investors, lobbying and interacting with individual companies so that the overseas Indian finds a suitable investment environment. Markets have stabilized and there is an impressive amount of interest in this segment.
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