For property investors, especially Non-Resident Indians (NRIs), the Indian real estate market is still a top favorite. Irrespective of where they live, the experience of buying property in India is truly remarkable for the NRIs. As per Foreign Exchange Management Act (FEMA) regulations, they can purchase or own property in India. Working overseas typically brings in a handsome salary, with a large portion often left for investments. NRIs are often confused about a good investment option for them. There are several reasons why a NRI might want to invest back home. While a lot of them want to finally come back and settle in India post-retirement, or after working for a few years. Even if they have no plan to return right now, they keep this investment as a contingency fund in case of unforeseen circumstances. Some NRIs may also wish to invest in India for their families back home. Moreover, investing domestically aids in diversifying and growing your financial assets.
Benefits Of NRIs Investing In Indian Real Estate: According to experts, NRIs invest in Indian real estate for a number of reasons, both personal and financial. The country's rapid urbanization and expanding economy make real estate a desirable long-term investment. While tier-2 cities provide emerging prospects with lower entry barriers, tier-1 cities like Mumbai, Bengaluru, and Delhi have historically seen good appreciation in property values.
“Regular cash flow is provided by rental revenue, and NRIs can repatriate rental profits and sale proceeds home within the parameters set by the government. Deductions for principal and interest on house loans reduce taxable income, among other tax advantages. Their international investment portfolios get suitably diversified by including Indian real estate,” says Anuj Puri, Chairman, Anarock group, a real estate service provider.
“Also, owning real estate in India has positive emotional connotations as it provides a physical link to their country of origin. When they return, they have a place to live and a way to help family members who are still in India. This is why NRI investors find Indian real estate a very attractive choice,” adds Puri.
According to experts, NRIs have the freedom to invest in most types of immovable property in India, except for agricultural land, plantation property, or farmhouses. India's banking rules are favorable towards NRIs wanting to invest in immovable property. Leading financial institutions here offer loans, based on a few terms and conditions. Such loans can cover different purposes such as buying land, building, or renovating homes, or purchasing commercial properties. You could pay equated monthly installments (EMIs) through remittances from abroad. Also, when the NRIs wish to return to their home country, investments in immovable properties can serve as retirement homes.
Says Shankar Singh, Managing Director, Residential Transaction Services, Colliers India: “The biggest opportunity NRIs should evaluate while investing in India is the projected economic growth. This would lead to substantial wealth creation in the country and further push up demand for real estate that is currently in short supply. NRIs can currently benefit from a strong foreign currency and invest in a futuristic India for self-use or out of financial prudence. Also, some other benefits are opportunities for future gains coupled with the fact that prices are still relatively low as compared to developed nations.”
If NRIs earn rental income from their property they must comply with income tax regulations. However, their investment in real estate projects doesn't face any legal hassle. They can also transfer property to someone living in India, who is a citizen of India, or a person of Indian origin residing outside India.
