NRI Investment in Indian Realty- What To Do or Not To Do, That is the Question

As it is believed, “Change is the only constant”, the Indian realty market does not defy this saying, either. With the strength of the rupee reducing against the US dollars, the trend of purchasing properties back home has turned out to be an even more lucrative investment opportunity, with large numbers of NRI buying property in India. Real estate experts believe that this rise usually occurred primarily because of two reasons- firstly, they look at it as an asset for investment, and secondly, they view it as a source of income by renting out these purchased spaces. However, the reasons have now changed. With the uncertainties and insecurities that the current Covid-19 pandemic situation brought along with it, more and more non-resident Indians started to reconsider coming back to their homeland or invest in immovable assets back in India to the least. Therefore, the driving force in NRI Property investment has now become more of an emotional calling towards the home country.

So, is NRI investment in real estate a good idea, especially during this ongoing pandemic?

Well, we would like to say, yes!

India, as a nation has always been perceived as a major or rather next major nerve center for production. Moreover, the reducing value of Indian rupees against the US Dollars, as spoken earlier, works as a lucrative facilitator for NRI investment in real estate. Therefore, ceasing the current market situation and making a property investment NOW will be an excellent idea for NRI’s, especially during the pandemic, as situation as the real estate prices have dipped to unimaginable low numbers.

Well, the reasons to strengthen our understanding on our opinion are, 1) it will provide an opportunity to boost your income through rent, 2) building a home for yourself to move to 3) it will be a sorry affair for you to not make a move considering the current real estate market and last but not the least 4) the tax benefit you will receive as NRI’s property in India is truly enviable.

Now, as an NRI what should one consider before buying a house in India?

The Covid-19 situation has emerged to be a boon for the real estate market and works as one of the safest bets as an investment option. We understand, how attractive investing in real estate looks to be. However, buying a property is no easy task, especially when you are sitting in another continent altogether. Property buying always comes with a whole lot of risks and these pointers must be kept in mind while buying a house in India.

· Foreign exchange rules and tax benefits- First and foremost one must be aware of the regulations put across by the Foreign Exchange Management Act of India (FEMA) and the tax benefits allowed by the Income Tax Act. As an NRI, when you are holding an Indian passport, you do not require RBI approval to invest in the Indian real estate sector. Loan applicants to repay the loan in Indian currency while abiding by all the laws and rules. This realty investment also allows you to avoid any kind of double taxation.

· Commercial properties are a better option to invest-Investing in commercial properties is recommended as that will ensure not only stable returns but also capital appreciation. It can even fetch you 6–10% of returns on your invested capital.

· Eligibility Criteria- Be aware of the fact that NRI’s are only allowed to invest in domestic and commercial properties and not on farmlands. However, they can receive the latter as gifts.

· Ensuring a Power of Attorney- A Power of Attorney must be issued by the NRI selecting a suitable individual residing in the country who shall carry out and make decisions in the owner’s absence, in case he or she is unable to attend property transaction events.

· Invest in Reputed Markets- For a profitable return on your investment; it is of vital importance that investment is done on highly appreciative markets which hold a lot of potentials. For example, the South Indian market, especially cities like Bangalore, Hyderabad, and Chennai offer magnificent returns on investment. This is primarily because of the immense development in e-commerce and IT-related businesses in these areas. Therefore, investing in villas in Bangalore and townships in Bangalore is a very good idea.

Finally, why select Bangalore or the South Indian Market for real estate investments?

As discussed in our earlier segment, an NRI needs to be aware of the quality markets that they should invest in. Observing the current trend and situation, Bangalore is our top recommendation. The reason being, Bengaluru is not only a metropolitan city but it has developed and is continuing to develop as the hub of the IT sector and manufacturing sector. Hence, the proportional growth of properties in and around this area is inevitable. So, whether you go for premium villas in Bangalore or affordable villas in Bangalore, be sure to receive satisfying returns on your NRI real estate investment in India.

Hence, the bottom line is that…

If you are looking to invest in the Indian realty market, being a non-resident Indian, you must receive rewarding returns. Whether you choose to buy a house in India from the USA or buy property from Dubai, know for a fact that with the development of the economy, property prices are sky-rocketing proportionally. Therefore, early investment in Indian realty will not disappoint you, on the contrary, will help you gain high returns in the future.

Sourced from:

“Why Real Estate is Seeing More NRI Investments Amid Covid-19” [March 18, 2021]

“Rules for NRI Investment in India in Real Estate”

“NRI Investment in Indian Real Estate” {30th July, 2020)

Nambiar Builders is an established company that provides real estate development in Bangalore. Live a luxurious life by booking your dream home with us.

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