The Indian real estate market is not only meant for the domestic buyers and investors. Of late, NRIs are also showing immense interest in real estate because of reasonable rates, high supply and high growth prospects. Builders are also rolling out exclusive offers for NRIs in the form of teaser rates and better payment plans.
A question that arises here is whether NRIs should be investing in Indian real estate and why. And the answer is quite clear by the fact that a good chunk of real estate investors are Non-Resident Indians (NRIs).
Why should NRIs Invest in Indian Real Estate?
Listed below are a few reasons why Non-Resident Indians should consider investing in Indian properties
- Property prices in India have corrected over the last few years.
- The real estate market has become much more regulated after RERA and REITs.
- There is tremendous opportunity for value appreciation especially in growing markets like Gurgaon, Noida, Pune, Bengaluru, Mumbai, etc.
- Commercial property in India is also on a growth trajectory and guarantees appraisal as well as regular rental income for the NRI owners.
- It is always in NRIs best interest to own a tangible asset in their home country for financial as well as emotional reasons.
- Weakening value of rupee against the dollar makes real estate investment easier for NRIs.
Things NRIs should keep in mind when investing in Indian Real Estate
Though investment in Indian real estate is a good idea for NRIs, they should definitely watch out for a few things. A few of these are mentioned below
Find the Right Location
If you are an NRI looking to invest in India, the first thing to consider is the location of the property. You must ask yourself whether you wish to buy the property for your own use or only for investment. Choose a location that is set to welcome infrastructure developments in the future and enjoys connectivity to important locations such as airport, corporate hubs, business centers, etc. Tier-II cities are also a special hit among NRIs these days.
Know the Rules
The Foreign Exchange Management Act (FEMA) has set certain guidelines related to NRI investments in real estate. For example, NRIs can own residential and commercial properties in India but not agricultural land. So, before you invest in a property, you must make sure that you do not violate any such rule.
Understand Payment and Repatriation Rules
NRIs can also take home loan in India to purchase a property but there are separate rules and regulations around it. They can pay using the funds in their NRE, NRO or FCNR Account. However, payments cannot be made in foreign currency and the deal cannot take place in a foreign country. Also, if you sell a property, the rule says that you cannot repatriate the sale proceeds above $1 million in a financial year.
Tax Laws are Different for NRIs
When buying a property, you should deduct TDS from the amount that you pay to the seller and there are separate rules governing this. You should also keep in mind that the rental proceeds from your property and the capital gains from the sale of property will be taxed in the country. You must know these laws and proceed accordingly.
Real estate in India is a wonderful investment instrument for NRIs if dealt in the right way after doing due diligence.
