NRI real estate investment is gaining new momentum in India in the aftermath of economic reforms being made in the country. Non-Residentially Indians already represent a major stake in the market due to their heavy cash inflow in Indian real estate markets.
A recent report stated that the real estate returns across 8 major cities of India have been encouraging and about $11.5 billion of capital is expected to be invested in the subcontinent by the NRIs.
This can be attributed to many reasons. Some of them being NRI interest in their motherland and hopes of settling back to it as they retire, or gaining rental income from pre-existing properties. Other reasons include fully functional business opportunities in India as the dollar to rupee conversion opens up investment windows for NRIs.
The Rupee Push
The recent turnarounds in the international currency exchange have proven out to be beneficial for NRIs. Rupee rates plummeted below record levels in the past few decades by crossing the 71 INR per dollar price.
Although it was bad news for other markets of the trade in the country, it meant that the same number of dollars abroad could buy more in India.
No better opportunity for prospecting NRIs who are already interested in investing. They were offered a major push towards this timely moneymaking chance.
Spacio Realtor’s NRI investment advisory and brokerage desk have been actively monitoring all the latest requests. If you’re an NRI who wants to grab this short-lived chance of making additional income on the sidelines, you can contact us.
The Best Places to Invest In India for NRIs
NRI investment in India is usually marked by high-magnitude of capital and premium sector properties. Most of NRI investments go well beyond crores of rupees and focus the top tier cities, where the property turnover is significantly high.
Therefore, for successful investments offering high ROI, we have shortlisted a few places in India that are worth your attention.
Mumbai continues to be at the apex of the real estate market in India. It is bustling with new developer projects and all sorts of luxury apartments that capture buyer interest from the top investors.
Refer to Spacio’s Mumbai Location Analysis for detailed information.
The most noticeable trend in Mumbai has been the hike in sales of apartments units that went up considerably high in past two years.
Carpet area prices in South Mumbai range between 60k to 125k for luxury flats going well beyond 3.44 crores per apartment. While, in the suburbs, the property rates fluctuate between 7k to 20k.
Furthermore, the sales of flats in Mumbai are being aided by the inception of RERA in the country that is now strengthening buyer interest in real estate again.
One important statistic that came forward due to this was the rise in affordable housing segment. More buyers are opting for affordable housing due to the on-going financial crunch in the country and it is being aided by everyone including bank house loans, government subsidies and new projects offering more-in-less.
The movement of the workforce into Mumbai in response to new job opportunities is a constant trend. The peripheral areas such as Thane, Naigaon, and others continue to get populated with newer townships each passing year, creating areas for investment.
Where in Mumbai?
Bengaluru or Bangalore is India’s unthroned IT capital with offices of various international IT giants and the biggest IT job sector in the country. With a population of over 10 million, the city has some of the finest properties to look for in India.
Unlike other metropolitans, Bangalore has an aesthetically planned architecture that boasts beautiful botanical gardens, commercial places, and residential colonies.
Bangalore is being seen as the most preferred destination for the startup generation and they have contributed towards the cities real estate growth significantly.
According to Hindu Business Line, Bangalore outnumbered Hyderabad in apartment sales and grossed close to 11,500 units in Q1 2018, which is nearly thrice the sales reported in Hyderabad.
A cumulation of factors ranging from rising IT jobs in the city and the ever-growing outsourcing industry in Bangalore has prompted the sales in Bangalore, which only stand second to sales in Mumbai.
Where in Bangalore?
Pune is a growing city in the state of Maharashtra of India that has seen a ton load of growth in the recent years. It’s spreading across various suburbs and villages, fueling in more real estate and opportunities for the buyers.
Pune has become the hub for a number of industries such as the automobile, Information Technology, and education. This is resulting in a surge of buyer demand in accommodation units in Pune.
The city’s traffic has been a constant problem for the residents and the upcoming airport project is eyeing to resolve this problem. With this new development, the rise in real estate in neighbouring areas would be eventual.
Experts look at Pune as the market of tomorrow considering how fast it is growing and the vast amount of investment opportunities it has for NRIs. Right now, it is being counted as the rising-metropolitan of India and once it gets there, the people who would have invested in it will be all rich.
Where in Pune?
Goa is a state in the west coast of India that enjoys beautiful sea views and heavy Portuguese influence, making it one of the most popular tourist attractions in India.
Unlike other metropolitans in India, Goa is calmer, more relaxed and less congested (at least in the offseason). It is marked by colonial houses, villas, beach homes and a lot of restaurants.
The ministry of Goa is taking special steps to develop the IT scene of Goa by introducing startup incubation centres and making it easier for newer small businesses in the state to set shop here.
This will bring in more employment, workers and ultimately, more real estate development in the state.
Due to its aesthetics and smooth paced life, Goa has received heavy interest from NRIs in past few years. For the families who wish to settle down in India in the next decade are eyeing Goa as their preferred home because of the large variety of beautiful homes it houses.
Where in Goa?
Welcome to 2018 when the dollar vs rupee battle has taken a historic turn. The rupee has fallen way beyond its limit and as of today, the dollar rates have crossed 70 INR, which is a one of the lowest of all lows.
Why this is happening is another story but someone’s loss is someone’s gold. NRIs and foreign institutions are all set to take advantage of this fact and invest in India, because there is more money to be made on the sidelines.
Many international investment bodies such as Blackstone, Brookefield and GIC have been up with their investment efforts in India. They’re looking to take more advantage of these facts and continue investing in residential properties of India.
“NRIs there are coming together as consortia and opting to buy properties in bulk, in deals worth Rs 100-150 crore. They are not buying individual flats but entire wings and even buildings. This way, they can immediately start putting them up for rent,” Prateek Shroff, an international property consultant in Mumbai, said.
You can clearly see that disposable income is being pumped in India’s real estate sector even when it’s not performing so well, to make long term gains.
This can be prove to be one opportune moment as NRIs and other foreign companies get to invest for 10-15% lower amount of cash without moving a finger. This is not only a chance but a big invest opportunity.
Resources say that a similar thing happened in 2013 as well, when rupee plummeted drastically and an overall rise in property investments was noticed, but this time, the things are different.
Why will it pay off?
Over the years, the worsening condition of NRI Indian real estate investment was finally being restored by government policy and a horde of investments being made in all parts of India. Certain property circles that were dead from years were beginning to show some improvement after all.
Such changes can be attributed to RERA, which has helped in increasing buyer confidence in property by putting stricter conditions on real estate scams and improving investment conditions for the buyers.
Right now, Indian markets are poised for profit and while the domestic population is still to cash on that, the NRIs are jumping the queue. Investments made today promise a great capital return in coming few years and what better way would it be when you get 15% discount on a property deal.
Therefore, NRIs who are investing in real estate today are making sure that their cash is in safe deposit and will offer flying returns in coming three years.
Why to be careful?
While the time is great to make some money by investments, there are even more chances for scam at this moment.
If you’re an NRI, your dealing with Indian real estate needs to be sound enough to get you the returns you’re aiming at. It won’t be as simple as picking a cake in the bakery shop down-street.
There are several real estate advisors who would want to pounce on this opportunity to make fraudulent deals or lure the NRI interest into something that has no future prospect.
You need to be careful of whom you’re going to deal with before you invest any money in India’s real estate. We advise you to run a quick research on the properties you want to invest and make sure that they’re classified as safe investments in India. If you’re in doubts, consult multiple property consultants and get the best vote in.
NRIs on a Rush
Several property investors from around the world are reporting that large sums of money are being invested in India’s real estate by NRIs.
There’s inflow from Hong Kong, UK and USA. Even with several legal hurdles on the path of buying property in India, there are efforts being made to cling on to the best properties in India from all parts of the world.
This could give India’s real estate a temporary push for the season and may prove beneficial for the coming times. The market that has been low since ages can finally reap some of the fruits that it was so desperate to have now.
Realty takes in Rupee
In some sense, the circumstantial events that lead to falling of rupee are aiding the realty. Even if the rupee is to fall, the realty is making hefty gains out of it, which may balance out the international losses being reported by India.
For now, we can’t say how long will this property bubble will last but till the time it’s there, it can help India’s property sector get a headstart.
Effect of Elections 2019
As we know that general elections are poised for 2019, and the realty market is going to another hit. The fact has actually contributed in decreasing international interest in property.
Investors like Blackstone are wary of their money and a withdrawal of around 2300 crores was reported recently due to the same fact by several foreign investors.
All of this is in the light of major turnover that comes with each election. The 2014 elections didn’t really help in improving the condition but the inception of RERA was a big step. Now we have to see how do these elections turn out and what will be the impacts.
Not a lot is expected though. It doesn’t matter which party wins, the property sector will slow down after all the major efforts that have been made to pull India’s realty out of dark.
NRIs looking to take advantage of this sudden plummet of rupee need to be careful with their investment; the rush hour can end up in bad decisions if they don’t consult an experienced real estate advisor.
The chances of getting heavy returns are there and the temporary discount for NRIs is something to be cashed on. There won’t be such deals anytime soon, especially in the light of upcoming elections.
The dangling property market of India is set for many changes in coming two years and this short lived bubble may help the real estate with the little push it needs to improve its conditions.
Are you an NRI who would be willing to invest or has already invested in immovable property in India? Here’s how your income will be taxed.
First of all, before understanding the tax policies, it is important to understand the residential status. For this refer to the section 6 of the Income Tax act, 1961.
After making the investment in immovable property in India, the following provisions will be relevant in understanding the taxability of income earned from such investments.
Under the Double taxation avoidance agreements, the tax credit could be claimed for the taxes paid in India, from the country of residence.
India has the right to tax the income arising out of the sale of immovable property which is situated in India.
If the property is held for more than 24 months, than it would become long term capital gain, so the tax rate will be 20%. If the property is held for less than 24 months than the tax will charged as per the tax rate applicable to NRIs for the short term capital gains.
The rental income of NRIs is also taxed, but there are certain deductions which could be claimed such as municipal taxes, standard deduction of 30% and deduction on interest amount, of the loan taken to acquire or construct the property.
There are certain exemptions from capital gains which could be claimed by NRIs under section 54, 54EC , 54F. For claiming deduction under section 54 and 54EC, the investment should be made in House property, out of the income acquired after sale of the property. Under the section 54EC the investment should be made in NHAI and REC bonds. These investments should be made within the prescribed time limit.
If the income of the NRI exceeds the 2,50,000 INR limit, then they need to file a return of income by July 31. If the total income of the NRI is just from the rental income, then they have to file a return even if the income is below 2,50,000 INR. It is not mandatory to file a return for them but it should be done in order to claim
There are certain deductions given under the Income Tax Act, 1961 from section 80C to 80TTA. These deductions can also be claimed by NRIs and reduce their burden of income tax. For example, if an NRI has taken a housing loan, then he can claim deduction on the repayment of the principal amount up to Rs 1,50,000.
From the above given provisions, it can be seen that the Indian tax policies are not that hard for the NRI’s, they are more or less, same as for the residents. Furthermore, they could also claim certain deductions which makes investment a whole more profitable.
Understanding these terms can help NRIs maintain a legally correct status and enjoy the tax benefits that are on offer.
If you closely watch NRI investment trends, the top commodities they’re playing at are foreign exchange and real estate. The latter specifically has seen enough ups and downs in past few years, but NRI attention to it has been unadulterated.
What has been surprising is that NRIs are routing for the commercial real estate sector. This wasn’t the trend two years back when most of the NRI investment flew in for residential and rental properties. Due to poor performance of the two sectors, the viability in the same has somewhat decreased. Also, the gains to be made out of commercial properties are far more lucrative to miss out.
Best Performing Categories
The commercial real estate has a number of categories according to which it is evaluated for investment. We have mentioned the best performing of the all below.
India’s is a large incubator of ideas and startup businesses that play on low spending and high output. This calls for the need of cheaper office spaces to be made available to them. Co-working spaces have recognized the need and delivered a solution that helps startups fulfill all their office environment needs at one place, may it be amenities or infrastructure.
Premium offices are currently the backbone of most commercial builder projects. The presence of multinationals in India and the constant need to glorify brand outlook, has brought about the trend of premium office spaces. They’re well lit as well well furnished with an impactful persona about them.
Information Technology hubs serve as the conglomerate of IT companies and jobs, that promote the culture altogether. These parks offer world class infrastructure to IT companies looking to make their base in India for production while offering profitable return on investment.
Factors that Favor NRI Commercial Estate Investment
NRIs bring in foreign wealth into the country, which makes them liable to some benefits for the same. Below are some policy benefits they enjoy.
Being an NRI doesn’t put you in a situation wherein managing capital for investment and carrying out investments becomes difficult. They enjoy the same rights and privileges as Indian citizens.
The NRI bank accounts offer them attractive benefits such as higher credit limits, money moving schemes and an overall relaxation on taxes while spending in India. The same fact applies to loans as well, the loan products offered to NRIs are differently schemed to suit their specifics.
Precautions for NRI Investment
NRIs are often veiled about the exact nature of investment deals due to physical barriers. This can result in inappropriate investments and legal consequences. The following lists provides some ways to avoid this.
Work With a ISO Registered Realtor
NRIs should only work with realtors who are worthy enough to be trusted all along. This can be ensured by the ISO seal as it is something that is only given to trustable businesses.
Check Property Papers Manually
A little check on the property papers for their integrity, authenticity and accuracy of particulars is also important. You can do it yourself if you deem fit or hire a professional lawyer for the same.
Investing in real estate is always a better option than squandering your money in some other assets. For that purpose, Indian Real Estate market is the most lucrative market across the globe for the NRIs.
Investment made in real estate today will surely bring higher appreciation in the future. Before making investment in India, certain provisions contained in Foreign Exchange Management Act are need to be taken care of.
Foreign Exchange Management Act (FEMA)
The provisions given under this Act, are about how a citizen living outside India could acquire property in India. According to the provisions of this Act, an NRI could acquire property like any other resident of India subject to certain conditions. The provisions for acquiring property are given below.
What needs to be checked before investing?
Before making an investment the NRI should be very careful in preparing a strategy for the investment. Because strategy for every investment is different. For instance, the investments is made in residential house property. For that, there is provision under the Income Tax Act, that if a loan is taken for acquiring the residential property, then deduction of Rs. 1,50,000 could be availed on interest amount.
Benefits to Invest in Indian Real Estate.
There are innumerable benefits of investing in Indian Real Estate. But if we have to take top five out of them then, those will be the following.
Various Indian Acts have made the investment rules and procedure much more simplified for the NRIs. These provisions are the following:
Income Tax Act,1961
Likewise, any other Indian, NRIs could claim deductions under this Act such as, deduction of Rs.1,00,000 under section 80C on the totality of the income tax. Deductions on the Income from house property given under section 24 and various others.
This act treats Indian citizens whether Indian residents or not in the same manner except in the case of agricultural/plantation land or farmhouse.
Reverse Bank of India
RBI has also made it’s policies liberal for the investments made by the NRIs.
Investing in one’s native country always gives a sense of belonging to a person living abroad. It helps in staying connected and rooted with their indigenous country. One could anytime visit there and meet their friends,family, relatives. Cultural traditions of their nation could be easily enjoyed.
Most of the NRIs who own real estate in India and use it as their place of accommodation for their infrequent visits, could easily earn some extra monetary benefits via leasing it. With this, some extra bucks would be earned and the property will be maintained.
These benefits are available to senior citizens for their personally owned homes. By this policy, they can earn some money from the banks.
India is the fastest growing economy. The prices of its real estate are not as higher as that of other countries. So, one could easily make an investment in India, at a very reasonable price.
The investment made by NRIs in the Indian Real Estate will fetch him greater rewards than in any other country. As nowadays, hassles are less, tensions are less, tax provisions are simple, provisions for repatriation are simple and easy, which means it is wise to invest in India. In spite of all the monetary benefits you will also stay connected to India.
Are you an NRI looking into investing in property back home? Right now might be the best time to do that!
Stay with me on this one. Here is a fact:
With the downfall of the rupee, there may be no time better than now to invest in Indian property.
The Reserve Bank of India (RBI) goes easy on NRIs and offers you convenient regulations so you can buy property here in your native homeland. You don’t even have to take prior permission from the concerned authorities. The Foreign Exchange Management Act (FEMA) governs the rules for such property transactions.
You, as an NRI, or as a Person of Indian Origin (PIO) can own and buy as many commercial and residential properties as you wish. There is no limiting number on that. However, you cannot buy a farm house, plantation property or agricultural land. You can, however, own such property if you’ve inherited it or if it has been gifted to you.
Before you buy the property, get the papers examined and verified by a lawyer. Make it a point to get a No Dues Certificate from the seller so that you’re certain there are no pending bills for you to meddle with. Once you’re certain that the property papers are clean, it becomes easier for you to get a loan to fund your purchase. If you’re eligible, the lenders will readily provide you a loan.
*Note that your profession and educational qualification play a major role in your eligibility for a loan. For instance, only graduate NRIs are eligible for home loans.
As per RBI’s regulations, you can avail 80% of the investment funds from a financial institute, the rest of the 20% is mandatory to come from your personal resources.
Another option which is notably suggestable for NRIs is to avail loans from overseas for their investments here in India.
Power of Attorney
It is not uncommon for NRIs to hand over their property’s Power of Attorney to a resident Indian. It helps in uncomplicating things a bit – it becomes easier for you to rent your property, put it under construction, or even to sell it.
It becomes very convenient for you to sell your property when the PoA is in the name of a resident Indian for this person can act on your behalf and complete all the formalities without you being present.
All you have to do is to get the Power of Attorney document prepared from a lawyer you trust.
Selling of Property by NRIs
As an NRI, you can sell your commercial or residential property to anyone you want (resident Indian or not), as per RBI’s regulations. However, if the property is an agricultural land, or farm house, or plantation, which you had inherited or you were gifted with, the case would differ. In such cases, you have to find a resident Indian buyer for your property. It is possible for you to gift such property to another Non-Resident Indian.
This is what you came looking for, didn’t you? Don’t worry, I’ve got you!
Property investment is one of the best tax-saving tool for both resident and non-resident Indians. An NRI avails all the tax benefits that a resident does. To add to that, NRIs get an added benefit if they purchase a residential property on a loan. You can claim a deduction on the home loan interest. This deduction has no upper limit, unlike the 1.5 lakh limit that exists for resident Indians.
There are plenty of benefits for NRIs on making property investments in India. The first best time to invest for you all was the immediate post-demonetization period, and the second best time is now. I wish you all the best with your investment ventures everyone!
Should NRIs invest in property in India? Absolutely, yes.
NRI investments in India have seen a sharp upward trend due to the relaxations provided by the government in order to attract more foreign investments. Indian property landscape is proliferating slowly into a mega-market that comes with the promise of hefty profits for all those who are interested to invest today.
So, if you are an NRI looking to invest and make some significant gains in the real estate sector, here is a quick guide for you on how to get started and what all things must be kept in mind.
The act makes allows any Non-residentially Indian with a valid Indian passport to make real estate purchases without any restrictions in India. The Reserve Bank allows this in conjugation with Foreign Exchange Management Act. Therefore, you needn’t worry about anything or seek permissions before buying land in India. It’s a default right available to NRIs.
Once you have made the decision to buy a piece of land or a fully constructed property, you’d have to pay the seller in Indian currency. It’ll be wise to do so with an authorized bank in India. Most banks have the facility to serve an NRI account which is a mandatory term while buying property. You also have to make sure that your bank history and identification proofs are all clear.
Just in case, you’d like to go for funding via a domestic institution in India, the government has made it really easy for you. Most high-authority banks in India offer easy NRI loan schemes with assured benefits. You will, however, need a clean NRI account in the same bank to avail the facility.
After verifying your bank history and checking all your documents, the bank can process a loan for 80% value of the property you intend to invest in and 20% would have to be arranged from your side.
Although Regulatory act allows you to buy any kind of land in India, there are certain conditions to it that you must bear in mind.
Property sale and purchase levy same tax laws as of the residential Indians to NRIs. There are two notable aspects of it.
If as an NRI, you hold the property for more than three years, then your tax deduction falls under long-term income gains which is taxed at a lower rate. We at Spacio, also suggest the same for this special benefit available to NRIs.
However, if you invest in the property and sell it out before three years, then the taxes are deducted as short-term gains on investment, that are taxed at a higher rate.
If you are a Non-Resident Indian, you must have thought about investing in real estate of your country, I am sure.
However, the reluctance arises due to misconceptions and the problematic procedure there is.
In our previous blog, we tried to clear the concept of NRI investments in India, and here in this piece, we would focus on all the reasons for Non-Resident Indians to invest in their country.
Even if there is no future plan to return, I bet, you wouldn’t find a better place to get more Return on investment than this.
So, here we go:
With the honorable Prime Minister of India, Narendra Modi’s Demonetization act, a lot changed.
There is both Good and bad side of this.
Prior to the reform, there was a lot of black marketing in this zone, due to most cash transactions, which reduced significantly.
Nevertheless, even the demand decreased.
When there is lesser demand, and freer space, the scope of negotiations increases.
On the top of which, Indian Rupee value decreased in international standards.
For Foreign investors, this is a boon!
Because if you have any doubt about it rising in the coming future, you are have probably been living in the Plato’s Cave.
For the matter of fact, India is among the fastest growing economies of the world.
With the announcement of various projects including Make In India, which has made some great laws in Foreign Direct Investments, real estate has attracted some huge investors.
For the simple reason, that it is one place that will never go down.
Even after Demonetization, which leads to falling prices in almost every state of India, prices in Metropolitans like Mumbai are still high!
You can well imagine yourself, how much Return of Investment the future has.
RERA came for the benefit of the buyers, introducing both security and transparency.
Now, both the builders and the real estate agents have to be a little more conscious of making promises than ever.
Be it residential properties, or a commercial one, there are assured benefits, only if you make an intelligent investment.
You keep yourself invested for some time, and you will be overwhelmed that you did. It is not just the matter of gaining profits, but having a property investment can back you at any time.
For the time being, you can place the property for rent, and it will act as a constant income.
Haven’t you heard, the only way you can earn lakhs sleeping at your home is when your home makes money.
Recommended: Things to know for NRIs buying a property in India.
Because of the Double Tax Avoidance Agreement, India has with many countries, taxes are made easy.
An NRI investor will only have to pay taxes on what the house earns for him/her, and nothing else.
RBI has no as such different law for NRIs, and they don’t need any sort of special approval from the former in case of purchasing an immovable property.
However, an approval is required if the property is an agricultural, plantation, or farm land.
With the boosting economy and giant market, as India owns this is not going down any soon.
The increase in employment opportunities, development of industrial areas, more people shifting their interest in entrepreneurship, and many other reasons have caused the influx of people to increase in certain areas.
For any more details, feel free to contact us.
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India on the whole stands good on most of the real estate investment parameters. Mumbai in particular offers a balance of good lifestyle with host of other reasons for NRIs to invest in residential property in Mumbai.
Connect with one of our experts. We look forward to helping you with your real estate investment needs. At Spacio, we have a dedicated NRI Help Desk.
Connect with one of our experts. We look forward to helping you with your real estate needs.