NRI Real Estate Investment: Ideal Time to Invest in India?

Real Estate Market in India is performing exponentially well when property markets across the globe are witnessing a slowdown. Stable property prices and an action-oriented legal framework lure investors across segments. With so many positive outcomes, many investors and Non-Resident Indians (NRI), showcase an inclination towards property investment in India.

Non-Resident Indians are Indian citizens settled outside the country. An individual residing outside India for equal to or more than 182 days is considered as an NRI.

Benefits of Investing In Real Estate Market in India

Garner Capital Appreciation

Compared to liquid assets, immovable assets' price increases in value with each passing day. The upwards movement in property prices is resultant in increased property value.

Suppose Mr.X bought a property in Y location. But capital appreciation is not on the cards yet. Then, the person can renovate the space to make it look alluring. A facelift of the property will appeal to investors and is saleable at a value greater than its actual cost.

Source of Passive Income

NRI investment in real estate is a source of second income. It is viable to yield monthly rentals by investing in residential/commercial property. Such an investment proves beneficial to repay the loan. Also, you can save the surplus income for the future. The regular inflow of money from property is also a ready-to-use contingency corpus in case of a financial crunch.

Diverse Portfolio

Real Estate offers an extensive range of investment portfolios. You can invest in affordable to ultra-luxury properties. Right from studio apartments, retail shops, offices, co-working spaces to managed service apartments. The multiple options enhance the possibility of wise property investment. Non-Indian residents are free to make investments anywhere across the country.

Current Trend in Indian Real Estate

Overview of Indian Real Estate Market

Indian real estate is among the most reputed real estate industries globally. The industry mainly deals in residential and commercial verticals. The surge in home ownership sentiment propelled the Indian property market to new heights of success. Reason being change in work style post-pandemic and demand for housing inventory across segments.

People prefer to own spacious homes with dedicated work zone, to enjoy family life is acting as a boom for the Indian reality market. The Q1, 2022-23, recorded the highest sale in the top residential markets of India. It is also the highest number of sales in the last decade.

Positive growth indicators

Indian settled outside the country, bet on real estate investment. The increase in earning capacity and stringent policies by the Government ensure transparent real estate deals. Affordable housing scheme and determination to experience better living standards are positive growth indicators for real estate in India.

RERA Guidelines

Real Estate Regulatory Authority ensures that property buyers do not suffer from delays in property possession. The authority monitors the project(s) status to ensure that the developer does not violate norms to gain the benefit. In case of violation, RERA has the right to penalise the developer and take strict action against the entity if required.

Tax Implication for Non-Resident Indians

• Non-Resident Indians are liable to follow tax implications. It includes a Registration Fee, Stamp Duty, and Annual property tax. NRI has to pay GST if the purchased property is currently under construction.
• Property purchased by an NRI is taxable at 30 percent via TDS (Tax Deduction at Source), and the remaining amount will be settled under the FEMA rules.
• NRI is liable for deductions ranging between 20 percent and 30 percent TDS in case of selling pre-owned property. It depends upon whether the sold property falls under short or long-term capital gain.

Legal Framework for NRI Real Estate Investment

Best Real Estate investments Options for NRIs in India

Non-Resident Indians are eligible to invest in residential and commercial property. The guideline of the Reserve Bank of India states, NRIs are not rightful to purchase agricultural or plantation land in India. Non-Indian Residents must inform RBI (Reserve Bank of India) about the successful property deal. There is no set limit for NRI investment in the country.

Payment against Property Purchase

Unlike regular citizens, NRIs have to make payments via remittance by foreign banks. Monetary transfer against NRI investment in India is possible via NRO/NRE/FCNR account. There is no payment provision via traveller’s cheque or foreign currency.

There is a provision for lending home loans to NRIs. It is only possible if the NRI property buyer has an Indian employer. Unlike a regular citizen, NRIs are required to make payment via remittance by foreign banks.

Home Loan Repayment for NRIs

The NRI has to follow the regular EMI payment option to repay the loan. The amount is payable via foreign remittance/ NRO/NRE/FCNR account. Approval of a home loan is simple if the property accrued rental income.

NRIs and Property Ownership

An individual with property ownership at the time of being an NRI can make land investment in India. It includes agricultural and plantation land. However, an NRI without prior property ownership cannot make such an investment in India.

Foreign Exchange Management Act (FEMA) guidelines

Under it, Non-Resident Indians can buy housing or commercial properties. NRIs are also eligible to receive a property as a gift from any relative/friend/family member. It is a part of government guidelines for NRI investment in real estate.

Top Cities and Regions for NRI Real Estate Investment

NRIs are eager to make property investments back home, and the most preferred destinations are Mumbai, Pune, Bangalore, Gurgaon, Delhi-NCR, and Noida. The downfall of the Indian rupee against the Dollar is another reason that lures Non-Resident Indians towards investment in immovable assets in India.

Another reason that marks a rise in NRI investment in India is the flexible work mode. In the post-pandemic world, the willingness to spend time with family and flexible work timings, is allowing people to own spacious homes to address work-life balance.

Investment Strategies to Make Best Real Estate Investment Deal

Research and due diligence before investing

To invest in the Indian property market NRIs are suggested to verify property papers. A person should not make a deal based on the suggestion given by a friend, relative, or family member. It is ideal to research the location, its connectivity, and the presence of social infrastructure within the premises. Property value and capital appreciation depend upon these features at large.

Conclusion

With the vast opportunity of properties to invest in, the introduction of RERA guidelines, transparency in payment methods and guideline to follow, NRI can seamlessly invest in Indian real estate.