The top Indian cities for NRIs to invest

Investing in Real Estate in India is a topic of perennial interest to NRIs. We frequently review NRI investment opportunities and ideas on this blog. A few recent blogs include:

Continuing the series, here is an extract from a recent article in The Hindu

Image: The Hindu

Indian real estate has always drawn the attention of Non Resident Indians (NRIs) simply because it is their country of origin.Indian real estate has always drawn the attention of Non Resident Indians (NRIs) simply because it is their country of origin.

Investing in realty, however, can be a little trickier when the buyer isn’t physically present. Although a lot of recent technological advancement such as virtual and augmented reality has made property buying simpler for NRIs, choosing the right city and location for the investment still requires considerable research before committing.
If you are an NRI looking for options to invest in Indian real estate, here are a few cities you could consider.

Mumbai – This bustling city continues to grow exponentially and due to this sole reason growth in peripheral areas is expected to be significant.

Hyderabad – Hyderabad is fast becoming the major IT hub in the country.

Bangalore – Bangalore continues to be a draw for IT/ITES employees with its pleasant weather and steady real estate market. Social infrastructure in the city is growing, and connectivity will reach greater levels with the completion of the next phase of the Metro system.

Chennai – Chennai realty is considered a safe investment simply because of the fact that there’s continuing demand for homes driven by the impressive industrial mix including technology, automobile, healthcare and manufacturing sectors. Areas in the southern part of the city are touted to be fast growing.


 

You may also be interested in the GaramChai.com section on Realtors 

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NRIs for real estate investment in India – Know the simple Rules

NRIs continue to evaluate real-estate investment opportunities in India. A few months ago, we blogged about the need for streamlined and flexible policies (ref: “NRI investment in real estate: Flexible policies are the need of the hour”). It turns out that things are moving in the right direction. There is a lot happening on the legislative front. NRIs also continue to look for changes in policies (‘Flexible policies are the need of the hour’).

The Hindu has an interesting article “Must-know rules for NRIs for real estate investment in India

One of the most important considerations for an NRI investing in Indian real estate is understanding of the financial landscape. If you are an NRI looking to invest in a property in India, here are few things you need to keep in mind before you start looking out for properties:

Regulatory Act – If you have an Indian passport, you do not require any prior permission to make a property investment in India. The Reserve Bank of India has made the rules very simple to attract more foreign investment. Real estate transactions are governed by the rules under the Foreign Exchange Management Act (FEMA).

Types of properties to invest in – There is no restriction on the number of properties than an NRI can invest in. An NRI, as well as a Person of Indian Origin (PIO), can purchase as many residential as well as commercial properties in India as they want. However, there is a restriction on foreign investment when it comes to agricultural land, plantation property or a farmhouse. Such properties are allowed only in case they are inherited or gifted to the NRI in question

Financial transactions and funding – For any property investment in India, all the transactions should be done in Indian currency through Indian banks. One of the mandates is to have an NRI account in an authorised Indian bank.

An NRI can easily get funding for the purchase if his paperwork is clean. There are several NRI home loan schemes available under different financial institutions in India. If you are getting your property funded make sure that you have a minimum of 20% of the value of the property to invest from your own sources. You can take funding for a maximum of 80% of the value of the property.

All your transaction should be carried through Indian banking channels, so make sure to use your NRO/NRE account for all your inward remittances. You can also issue post-dated cheques or ECS from your NRE, NRO or FCNR (Foreign Currency Non Resident) account.

Before you approach the bank for funding, check that all your paperwork is clean and verified by a lawyer. Take a no-dues certificate from the seller if you are buying a property and if it’s inherited or jointly held, work to get the title cleared. Also, ensure that there are no pending bills or dues with any authorities.

Power of attorney – If you are buying an under-construction property, you will have to give power of attorney to your builder or a trusted associate. Take help from your lawyer to appropriately word the document so that there is no chance of forgery and your investment is secured while the property is being developed.

Tax benefits – As an NRI you can enjoy most of the tax benefits that an Indian resident is entitled to on purchase of property. You can claim a deduction of Rs. 1 Lakh under section 80 C on the Income Tax Act, 1961. If you sell the property within three years of purchase, it is considered as short-term capital gain, and the earnings through the property are taxable. If you sell the property after three years, you have the option of reducing the long-term capital gains tax by investing in another property.

The Confederation of Real Estate Developers Association of India (CREDAI) regularly organises exhibitions for NRIs where it helps them scan different investment options and offer spot loans from top banks. Easy investment options and reduction in down payment value are also offered. Therefore, it is important that you check all the offers from CREDAI before you invest in real estate in India.


 

You may also be interested in GaramChai.com Realtor and Return2India Sections.