As mentioned in some of our
earlier blog posts, NRIs are now turning their long held aspirations of owning
real estate in India, into reality by buying property in India. India’s growth
story continues to fascinate the world and NRIs are looking to capitalize by
buying property in India and it is a no brainer as India has continued to give
an average of 20% return on investment per annum even as most of the world
economies are in recession.
More importantly NRI buying a property
in India has become more prevalent as many avenues are being created as
well as schemes being fashioned for NRI/PIO/OCIs to bring in maximum investment
from abroad.
Below is a quick overview on
developments that have led to an increasing interest and inflow of investments
from the NRI community worldwide.
All persons residing outside
India holding Indian passports and also people of Indian origin have been
granted permission by the Reserve Bank of India (RBI) to invest in both
residential and commercial properties in India.
The government including RBI and
Foreign Exchange Management Act (FEMA) has liberalized the rules and
regulations for the NRI buying property in India. Liberalization along with the
added advantage of repatriation of the capital invested and even the rental
proceeds under the circumstances prescribed by RBI have also encouraged NRI to
buy property in India. Capital gains accruing from any sale of property can be
remitted out of India after paying capital gains tax. This has encouraged NRI
to buy property in India as it has been a big concern within the NRI community
on repatriation of funds abroad.
With most world economies facing
a slowdown, NRI buying a property in India has had a
return on an average of 20% pa and in some pockets like Gurgaon a return of
50-60%pa. India is a safe destination - a brisk economy and a huge population
fuelling it.
To an NRI buying a property in
India, a base in the homeland also brings with it a sense of security. The number
of NRIs who are investing in property for sentimental reasons and for better
investment returns is multiplying.
As opposed to earlier times when
an NRI had to struggle with Municipal rules, income tax and wealth tax issues,
succession legislations for all religions, the Hindu joint family Act, land
ceilings and others, these are times that have NRIs being welcomed with a red
carpet. The flexibility in rules has elicited an extraordinary response from
the NRI community.
The NRI buying a property in India can now
raise financing from financial institutions to purchase a residential apartment
/ flat. The Housing Development and Finance Corporation (HDFC), ICICI, Axis
Bank and other financial institutions in India are facilitating the NRI
investment in property speedily and efficiently. The repayment of the home loan
can be made through a normal banking channel by way of inward remittance. For
those who earn an income in India through rent, dividends, pension, etc the
loan can be repaid by way of direct debit into the accounts of Non-Residents
External [NRE] or Non-Resident Ordinary [NRO] accounts.
Professionals have been suitably
empowered to deal with the matter of remittances. NRIs are free to repatriate
in foreign currency their current earnings in India such as rent, dividend,
pension, interest and the like based on appropriate certification.
Online NRI banking in India and
these accounts for NRIs have made life much easier for transactions involved in
NRI investment in India.
What has also made NRIs flock to
India has been the initiative by builders and real estate dealers to
ensure transparency about the projects on offer and fairness in dealings. NRIs
consider their investments to be safe and rewarding when they park their money
in real estate India.
