Indian real estate market has been lucrative for NRI’s (non-residential residents) to invest their bags of money. Plus, the RBI’s regulations for acquiring property by NRI in India are fairly easy.
There’s no surprise to the fact that an estimated 30 million NRIs living in 160 nations are looking for real estate investment opportunities in India. Statistics prove that India has experienced a consistent rise in significant expatriate US dollar remittance for years from $55.6 billion in 2010-11, $66.1 billion in 2011-12, $67.6 billion in 2012-13 to $ 70.68 last year.
As per a proposal recently approved by the Indian government, it has approved the investments made by NRIs that are to be considered as domestic investment equivalent to resident investments. Thus, NRI investment norms have been eased considerably.
Favorable Conditions for NRI Investment
For the average NRI looking opportunities to invest in residential apartments or villas, the timing is suitable as many pre-launch offers are on rise offered by realtors to reduce working capital requirements. Hence, on an average, an NRI investor can expect a return of 20-25 per cent on his investment while investing in such projects that could otherwise take at least 18-24 months for implementation.
For those NRIs holding land parcels or innate properties, joint venture agreements with leading developers would allow them to convert their land into useful and income generating assets.
Those who want to invest in leased commercial property, accessibility to commercial property investment options is limited, especially of smaller units and even the investment cap for such properties varies from Rs 5 crore to Rs 10 crore ($770,000 to $1.5 million). As a result, the yield too varies from 9 to 11 per cent that depends on the building, developer, tenant, location, specification and amenities offered in the project.
Investment Norms Eased
Seeing the demand and benefits, Reserve Bank of India (RBI) has considerably relieved investment norms for NRIs in real estate. They are now allowed to buy, sell, gift and inherit immovable property in India. However, the restricted categories of properties include agricultural land, plantation property and farms. With reference to the sale of immovable property, the accredited dealer may allow repatriation of sale proceeds for at least two housing units.
An NRI may remit an amount that should not exceed $1 million per financial year out of the balances held in NRO accounts. Further, the RBI has also made it clear that income and sale proceeds of assets held overseas by NRIs need not be repatriated to India and can be recollected and invested outside India.
Wealth-tax has been eliminated on the taxation front. On capital gains received while selling immovable property, the inflation cost index will allow NRIs to reduce tax liability.
NRI investors are advised to follow the rules and other basic realities while investing in real estate. Verification of title deeds, encumbrance certificate for a minimum period of 30 years, revenue documents, planning permission and proof of documents to get basic amenities would minimize their troubles.