The Indian real estate market presents a lucrative option for the NRI community in the backdrop of property prices decreasing in the post-COVID-19 period. In addition, with the Indian currency experiencing high volatility in the last two years, the NRI community has all the more reason to seek out real estate assets in their home country. In fact, a study mentions that the real estate sector experienced a dramatic increase in terms of attention received from the NRI community immediately after the government announced the lifting of lockdown measures in 2020.
Interestingly, the state governments, on their part, too have responded with some encouraging changes in rules and introduced measures to boost NRI real estate investments. In another report by The Economic Times, in financial year 2021–22, real estate investments by NRIs were worth USD 13.1 billion. This is projected to grow by 12% to USD 14.9 billion in financial year 2022–23.
With the forecast of a growth rate of 12% in property sales to NRIs in 2022–23, there are some valid reasons why non-resident Indians are so eagerly buying property in India. Some of these have been discussed below.
Four Reasons for NRI Investment in Real Estate in India
- A friendly and straightforward taxation regime is a big pro in this case. For example, when an NRI buys a property in India, they need to wait for two years, after which the investment becomes a long-term capital asset. Such an investment attracts 20% taxes as an indexation benefit.
- RERA has helped streamline the complex domain of real estate investments in India. Consequently, there is more credibility and confidence among the buyers when buying property in India. For example, RERA has ensured increased transparency in buying and selling of properties with a focus on registering genuine builders, developers, agents, and properties.
- NRIs can also avail of income tax deductions as per 80C and 80TTA under the Income Tax Act of India.
The payment process is uncomplicated and simple:
Rupee at all-time low means boom for NRIs:
Luxury housing options in India:
Policies promoting NRI investment:
One of the encouraging aspects of the real estate sector in India is that the government at various levels has introduced customer-friendly policies. As a result, the overall spectrum attracts domestic and foreign buyers consistently. The Reserve Bank of India (RBI) and the Security and Exchanges Board of India (SEBI) have come up with many guidelines that support Foreign Direct Investment (FDI). Armed with friendlier policies, NRIs feel motivated to park their money in India in immovable assets such as property.
These are some favourable regulations playing a significant role in driving NRI real estate investments in India:
When buying any property in India, NRIs can take advantage of India's unobtrusive and straightforward payment process. India's financial and banking industry has easy-to-follow steps and guidelines with a few basic criteria to meet.
An NRI keen to buy a property in any state in India only needs to have an NRO (Non Resident Ordinary) account, and they need to transfer the money into this account. The seller of the property can be paid directly from this account. Alternatively, the buyer can directly transfer the funds into the seller’s bank account.
The paperwork and the legwork have also been kept to a minimum in India. There are no long-drawn legal formalities in the process of investing in an immovable asset in India. There is a checklist, and interested NRIs can check with RERA or their banks in India before purchasing a property.
Although the rupee is at an all-time low, this aspect is working well for NRIs. By making a real estate investment in the country, they are set to make good gains, with the rupee dropping to the all-time low of INR 75 against the dollar. There are speculations that the value might fall further. Thus, it is a great time for an NRI to invest in a property in India. Land worth INR 75 lakh is going to cost an NRI only USD 1,00,000 now. On the flip side, if the exchange rate was INR 65 for a dollar, it would have been USD 1,15,000. Thus, this translates into good savings for NRIs.
NRIs typically prefer holistic, contemporary spaces where they can work, play, and rest well. The Indian real estate sector has gradually witnessed the entry of profound builders who create spaces that cater to wellness and are equipped with modern amenities, better connectivity, etc. This is an excellent motivator for NRIs to consider investment opportunities in the Indian real estate sector.
The past couple of years proved to be very challenging for the Indian economy. The ongoing pandemic was also one of the reasons behind these economic hardships. After overcoming these challenges, the economy is resurgent, and the demand for real estate has again gained strength. The coming years are expected to witness the economy growing by leaps and bounds, resulting in an appreciation of property pricing. NRIs investing in real estate in India can look forward to enjoying handsome returns on their investment. Moreover, new segments of real estate, such as co-working spaces, fractional land ownership, warehouses, commercial real estate, etc., have also provided excellent real estate opportunities.
The Indian government has taken several initiatives to entice foreign investors. SEBI and RBI have formulated several guidelines and policies to encourage FDI, or Foreign Direct Investments. This reason has also resulted in many NRIs looking at the Indian real estate sector from an investment point of view. Statistics indicate that NRIs invested USD 13.1 billion in real estate in 2021, which has been registered as an all-time high figure. The tide has turned, and the sector is brimming with positive opportunities.
All these reasons and more make the Indian real estate sector perfect for investments by NRIs. They can expect handsome returns on their investment in a dynamic market condition. High-end luxury real estate projects by real estate stalwarts such as Adani Realty are garnering a lot of attention among NRIs looking for a real estate investment opportunity in India.
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