For better opportunities in education, employment and business, several Indians migrate to foreign countries each year. Known as NRIs (Non-Residential Indians), they are holders of an Indian passport but reside in another country for work that indicates an intention to stay out of India for an indefinite period of time.
However, over time, India has become an attractive investment destination, drawing global attention. With the help of various factors such as improved foreign relations, low inflation and interest rates India is creating highly favourable opportunities for investment. As a result of this, there are multiple investment opportunities present for NRIs, which include fixed deposits, equity, mutual funds, national pension schemes, government bonds & securities, insurance and real estate.
Real estate is one of the most traditional investment options that have attracted NRIs since long. There are many reasons why NRIs prefer to invest in real estate in India. One of the main reasons happen to be the emotional security that comes with owning property in your motherland and a growing economy of a developing nation with soaring property prices. Along with this, revisions in legalities, backing of the “Housing for all” initiative and flurry of developmental activities across the country’s real estate sector offer enticing opportunities. While some of the rules and regulations put in place for NRI investment in real estate may seem a little orthodox, these rules have proved their efficiency through the years. It is important for NRIs to deliberate on certain factors before making a purchase decision, which will help them understand the nitty-gritty of the aforementioned regulations, for a successful purchase of property in India.
These factors are explained below:
According to RBI’s Foreign Exchange Management Act (FEMA) guidelines, NRIs have blanket permission to buy any number of unmovable properties in the country, but this permission is limited to certain types of property. Agricultural land and plantations are exempt from these approvals, but all residential and commercial properties are fair game. NRIs must consider their options carefully and check the economic conditions in the nation before making their choice of purchase.
In a move that has benefitted NRIs, with the passing of the Benami Transaction Bill, all cash payments for NRIs have been blocked. Due to this all property transactions are to be done through direct bank transfers from their non-resident-rupee account and non-resident-rupee accounts solely, making the purchase process easier and more transparent. NRIs are also eligible to get a home loan, EMIs on, which can be serviced by way of proper banking channels, or even from rental yields of any purchased property that is let out on rent.
Digitisation has brought innumerable benefits to people across the world and NRIs need to make optimised use of this to find better real estate investment opportunities. Most of the reputable builders in India have a social media presence for all of their projects and have specially curated teams that offer project updates periodically. It is highly beneficial for NRIs to regularly check the social media pages of builders, developers and projects of interest along with official websites, real estate portals and forums for real-time updates on property investments.
It is extremely important for any NRI investing in real estate to understand the various laws put in place by the Indian government about owning, leasing, inheriting and bequeathing of property for their own benefit as some of these properties gain exemption from tax. For example, any property gifted to an NRI by a relative is exempt from tax.
There have been numerous reports of NRI buyers getting deceived by builders and developers due to their absence in the country. This is why it is important for NRI’s to appoint an acquaintance or professional and give them the power of attorney to oversee the progress taking place for their purchased property – commercial or residential.
It is always important to know the progress of purchased property, and NRI’s need to be especially careful about it. They should not depend solely on social media updates for this task but look for different options to do the same. One of the ways they can go about it is by getting in touch with other buyers and conversing with them to get updates. They can also make sure their representative, acquaintance or friend swings by the site to check up on the progress. This way they are less liable to be caught unaware in fraud or unnecessary delays.
The author is CEO, Sai Estate Consultancy (Chembur)