Top 5 Reasons Why NRI Should Invest In Indian Real Estate Market

Growing Indian Market For NRI

There has been a steady increase in the number of Indian nationals residing outside India in recent years. The demand for real estate has increased due to the growing number of NRIs who come to India every year to buy property here. 

Homebazaar.com VP Nikhil Naikhare recently shared thoughts on growing NRI investments in India. He said, “The Indian real estate market is known for its resilience and steady appreciation, presenting NRIs with a stable and potentially lucrative investment avenue. With a growing economy and a booming real estate sector, NRIs can strategically invest in residential or commercial properties, tapping into the nation’s robust growth trajectory.”

During the COVID pandemic, India also faced an economic crisis but now everything is returning to normal. The economy will rise rapidly over the next few years as the previously suppressed demand has begun to surface.

The property prices will increase by this and NRI investors can expect a good investment return. Other segments like the commercial sector, co-working spaces, and warehouses are good investment opportunities for NRI.

Note:

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Positive Property Price Appreciation

Since 2015, residential property prices have increased by 7% (CAGR) annually across 8 major cities, whereas apartment rents have increased by 2% (CAGR), throughout this time.

Major metropolitan cities like Mumbai, Delhi, Bangalore, Pune, Chennai, Hyderabad, and Kolkata have seen an appreciation in property rates. This can be because security and shared amenities and facilities like power backup, parking, clubs, gyms, swimming pools, and green areas, among others, contribute to the popularity of apartments.

According to recent reports, demand for independent floors and plots also increased strongly among NRI investors.

Better ROI For NRI Investors

Indians who live and work overseas used to favour investment products like bank FDs, gold, and the stock market.

Investments in these assets are exposed to market fluctuation, and the returns on fixed deposits and gold are only 4- 6% annually on average.

Whereas real estate especially in the commercial sector is a profitable investment, which offers an average of 8-10% of rental yields yearly. The potential for significant long-term returns keeps investors interested as smaller cities transition into growth engines. 

Due to this NRI investors are encouraged to invest in property in these locations by the growth of tier II and tier III cities. 

Dropping Value Of The Rupee

The NRI population enjoys the unique benefit of turning their foreign-earned money into profitable investment opportunities in India. 

Real estate investing has become more accessible and economical with the Indian currency values at a record drop of Rs 79+ to the dollar. As the worth of the Indian rupee continues to decline, investors’ purchasing power will be multiplied.

This margin can save a lot of money for NRI investors in the case of substantial investments like real estate.

Easier Tax System

An easier tax system encourages NRIs to keep their excess funds in India, which continues to be one of the top countries for receiving foreign exchange from outside. 

For real estate owned in India, NRIs also profit from indexation. For instance, immovable property is considered property, is seen as a long-term investment and obtains a benefit from indexation with reduced tax at 20% when maintained for more than 24 months. 

The act of income tax in India additionally allows some tax deductions, which is beneficial for NRI investors.

NRI-Friendly Investment Regulations

The RBI has loosened various investment regulations to encourage NRI investments and make the market far more accessible.

The purchasing procedure for buying a home in India is now a lot quicker and involves less documentation than it did in the past. 

The requirement to obtain RBI approval before purchasing a property is no longer required. However, in the instance of agricultural land, a permit is required.

Transparent Transaction System 

NRI who are looking forward to purchasing properties in India is now looking at ways by which they can secure their investment without worrying about exchange rate fluctuations.

To lessen the fraud and project compulsion delays connected to real estate purchases, the RERA was introduced in 2016. The law has given property buyers more authority. 

The law now requires dealers and developers to provide all relevant information about the developing property. Along with rights, RERA also grants investors several perks. 

The introduction of GST is an additional benefit for NRI investors because, thanks to this consistent tax structure, they can no longer be tricked into paying more for the property.

NRI Real Estate Investment In India Through Joint Ownership

Any NRI can buy a property together with another NRI citizen. Regardless, of how much the second buyer contributed to the acquisition

 However, the  NRI and permanent Indian citizen is not permitted to engage in real estate in India and cannot become joint owner of any such property.

Important Things to Consider for NRI Investment in Real Estate in India

The following things are important to consider for NRI investment in Real estate in India.

• There is no restriction on the number of homes that NRIs can acquire in India.
• They are not permitted to buy any plantations or agricultural land in India. When purchasing farming land for a specific purpose, RBI approval is necessary.
• Without the Reserve Bank of India’s approval, NRIs are free to purchase any type of real estate, whether it be commercial or residential.
• Non-residents may authorise somebody in India to act on their behalf by signing a Power of Attorney. The individual will put the NRI’s name on the paperwork.
• NRI buyers must pay the same acquisition fees and taxes as native Indian buyers, including stamp duty, registration, annual real estate taxes, etc.

The best choice for NRI investing is in Indian real estate. Over time, NRIs have invested more and more in India’s residential and commercial estate. Before making any investment selections, you must take into account every significant factor, including the asset, the size of the investment, the return on investment, and taxes.

HomeBazaar.com is dedicated to providing comprehensive support and guidance to our NRI clients, ensuring they navigate the intricacies of the real estate landscape seamlessly.

By investing in Indian real estate through HomeBazaar.com, NRIs can not only secure their financial future but also contribute to the development and prosperity of the nation. We take pride in being a trusted partner for NRIs seeking to capitalize on the abundant opportunities within India’s dynamic real estate market.

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