NRI real estate investment in India has always been a hot topic in India’s significant investments! NRI’s form a large chunk of investors in India.
Among a pool of options to invest from, Most of the NRIs prefer to invest in the city’s residential real estate as it offers them a safe area of investment. Nearly 63% NRIs prefer real estate over any other investment in India.
According to a report released by 360 Realtors, “NRI investments in Indian real estate has doubled from $5 billion in 2014 to $10.2 billion in 2018.”
In fact, not only in the luxury residential Villas and apartments, but the NRI’s are also looking forward to investing in commercial properties as well.
After the allowance of 100% FDI in the sector, the NRI investments in India have exponentially increased, and Investment-wise, NRIs are more inclined towards commercial real estate.
But, to play safely in India’s real estate investment market, the Non Residents Indian investors should also be aware of the real estate tips for NRIs in the Indian property market and also check these real estate investment trends
I have highlighted a few here,
NRI’s Real Estate Investments Tips
Let us start with a fantastic fact that overseas investments have surged 137 percent, from USD 3.2 billion during 2011-13 to USD 7.6 billion during 2014-16.
If you belong to a class of those Non-resident Indian’s who are looking forward to investing in real estate in India, then these tips will be the best thing that you will come across.
Know About the FEMA Rules:
To attract foreign investors and more investment in India, the reserve bank of India passed the FEMA law.
FEMA is the foreign management act passed on 29th December 1999, relates to the acquisition of immovable properties, and all the real estate investments fall under the FEMA law.
All NRIs and PIOs (Persons of Indian Origin) can purchase residential and commercial real estate in India. However, there are few exceptions of the same,
Firstly, the agriculture, plantation, and farmhouses are exclusions of the investment; secondly, no person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, shall acquire or transfer immovable property in India, other than lease, not exceeding five years, without prior permission of the Reserve Bank.
Be Well Aware of the Location:
The choice of location for investors depends upon the use of the property, whether the investor wishes to buy for end use or is looking forward to investors to gain returns in the future.
If the choice is end-use, then there are plenty of options. Investors can choose to invest in cities like Jaipur as it has a vibrant living culture and are also brimming with opportunities.
On the other hand, if one is looking forward to investing in NRI real estate, then India’s commercial real estate presents a profitable alternative for NRI investors.
Good capital appreciation and rental yield have increased NRI demand for offices, IT parks, logistics centres.
While residential real estate remains the first choice of NRI’s, an excellent commercial property can give an average rental yield of 6-10% against the current residential property rental yield of 1.5-3.5%.
Focus on Some Market Research:
No matter how many friends and family have advised you to invest in real estate but, doing a thorough market research is one NRI real estate investment tip that will make the most sense when it comes to reality.
The real estate market trends keep on fluctuating every day; thus, keeping a check on real estate trends is essential. However, it is not possible to do so if one isn’t living in India.
Thus, it would be advisable to hire a trustworthy Group who can maintain a property on your behalf when you aren’t available for the same.
Additionally, if you opt for a renowned group to buy a property or flat then, their maintenance team can collect the monthly rents and cheques from the tenants.
Know the Areas of Earning:
The NRI investments in India are a matter of great concern to all those who come and invest in the country to gain some significant ROI from the real estate.
There are three main areas of earning from real estate investment; mainly, rental properties, short term capital gains, long term capital gains.
A rental income is the income accrued in India and is taxable. A short term capital gain is when the property is put up for sale within two years of purchase.
A long-term capital gain is when the property is held for more than two years, and 20% tax is levied on the same.
In My Opinion
If one is looking forward to NRI real estate investment in India then this is the best time to invest. As the government is offering subsidies on home loans and the rates of interest in housing loans have also seen a record low.
Although, the prices are expected to rise in Q2 2020!
Thus, if you are an NRI, investing in the residential properties, mainly 3 BHK’s, at this point of time will prove to be beneficial in the long run.