Several reforms introduced in the Indian real estate sector in the last two-three years are assisting the market move towards enhanced transparency and are thus enticing more foreign institutional investors. Key strategy changes such as REIT, RERA, GST, and the PMAY affordable housing have influenced the realty sector positively. With laws now enabling 100 % FDI in construction expansion and REITs in position for commercial real estate, the real estate industry of India is experiencing enhancing investment blends from NRIs.
At present, better returns and yield on investments, and reduction in the rupee’s value also have become the reasons for NRI investments in Indian real estate. Additionally, the element of risk once related to property investment in India has been mitigated with the execution of RERA largely. Ease of general government and FDI norms focus on housing also adds to the confidence of an NRI Investor.
What NRIs Invest in
NRIs usually like investing in properties in their home state or city, mainly as they are more common with those territories and always have friends or family who can deal with the management and renting aspects. But, more experienced investors with adequate knowledge about other cities – or those working with reputed real estate consultancies – do venture into other cities as well. NRIs usually invest in their home markets first, followed by key markets where apparent developers, chiefly corporate developers, are active. The key markets include Delhi NCR, Pune, Mumbai, Bangalore and some tier-II and tier-III cities. The key investors in Canada and the US, followed by the UK, Singapore, and Dubai.
Investment in Lavish Residential Market
The NRIs are specifically curious to invest in luxury apartments of India of key cities such as Mumbai, Delhi NCR, Chennai, and Bangalore. And investments are not only being made in Tier 1 metro cities in India that are stuffed with civic and commercial amenities but also in fast-growing Tier 2 and Tier 3 cities. According to the research, it has been found that NRIs usually bought extravagance homes either for excellent ROI or for their personal use. After a long period after the current reformatory changes in the real estate market of India, the trend is now slanted towards individual use decidedly. For NRIs, the reality continues to be customer-driven because of location and distinctive product offerings.
NRIs conventionally invest in world-class extravagance properties back home. For customers, such properties provide them the global lifestyle they are familiar with and also generate large rental income. Several development projects have been offering discounts and freebies, particularly to NRI investors, thus making the market more eye-catching and lucrative. Discounts are usually being offered to the section of first-time NRI buyers in real estate projects in several housing hubs, mainly during the festive season every year. This has increased the demand for 4, 3, 2, and 1 BHK flat in Delhi, India. NRIs who aim to get the best ROI usually give the rent house in Delhi, India.
Delhi is an attractive realty investment destination for NRIs
Real estate in Delhi has gone through a huge metamorphosis over the years. Central Business District has retained its standing as the hub of the corporate and commercial hub. The residential landscape has changed from individual houses to high rises and row houses around the CBD. Landowners have realized vast fortune either through agreement or sale and plots have been experiencing more and more reality projects.
North Delhi, which had long been considered as a low-income cluster, has been changed into the housing market for middle-income homebuyers. Comparatively, lower land prices have made it a precious possession for realty developers and apartments have come up fast. North and West Delhi have become identical with demand for residential projects and the change in FSI norms has made it possible that the skyline would grow taller in the future, offering bigger residential units for potential customers. NRIs looking for luxurious apartments or budget-friendly 1 BHK flat in Delhi, India can easily find the same here. They can even offer their house on rent houses in Delhi, India to earn the best rental income.
Joint agreement for developing a project has become the standard with landowners. Along with residential development, office space has also been developed fast in places like Janakpuri, Pitampura, and Rohini. East and North-East part of the city is home to both planned row house colonies and impromptu residential clusters. One can see well-known apartment projects in Mayur Vihar and IP Extension and also plotted row house colonies as well as Commonwealth Game Village.
Dwarka has flourished as a blooming sub-city in the last decade or so. The co-operative societies cater to the vast housing demand. South Delhi is home to luxurious, lavish, lifestyle and luxury villas and independent designer floors have sprawled the realty landscape there.
Here are a few points that should be considered by NRIs while investing their money in this sector:
- Currency: NRIs staying in countries such as the USA, UK, Dubai, etc. earn in the currencies of individual nations that are trading powerfully against the rupee comparatively. Thus, they have the benefit of investing extra in Indian real estate because of the gap between currency values.
- Indian real estate situation: Several real estate developers in India have understood the demand for more efficient products and better designed by NRIs in cities such as Gurgaon, Delhi, Noida, Chandigarh, etc. and hence, are operating on the individual demands. Several well-known real estate developers are working on various luxury realty projects in Noida, Ghaziabad, and Mohali considering the same demands and choices of NRIs. Thus, investing in good projects by NRIs will certainly be a wise choice.
- Income tax: The biggest advantage for NRIs is that if they invest their money in any steady property in India then they are legally responsible to comply with hardly any legal formality. In real estate, they just need to finish registration formalities. Even though, if they earn rental revenue from the property then they are expected to comply with income tax fulfillments. But, their investment in realty projects needs no huge legal formalities.
These are some reasons that make realty investment an enticing choice for NRIs. But, NRIs need to know several things regarding the property like the registrations process, circle rates, etc.