Things NRIs should know while investing in real estate

Investing in the real estate market in India has never seemed so attractive to Non-Resident Indians.  With the move by the Indian government to regulate the real estate sector, bringing in more transparency and accountability through RERA, there has been a greater resurgence of NRI interest in the Indian realty market. Investing in Indian real estate can give NRIs the benefit of a high return on their investment and a lower initial capital investment. To ensure that there are no sudden obstacles in your investment journey, there are certain rules and regulations for NRI investments that you need to keep in mind. 

If you are an NRI, and are interested in investing in India, you need to be aware of the following.

Foreign exchange regulations and tax benefits

Ensure that you abide by the Foreign Exchange Management Act of India (FEMA) regulations. NRIs holding an Indian passport need no approval from the RBI to invest in the Indian realty sector. All loans applied for in India are to be repaid in Indian rupees, and Indian laws and taxation norms are to be followed during investing in real estate. It is of vital importance to get familiar with tax benefits allowed under the Income Tax Act as they can be used to avoid double taxation and reduce your tax burden.

Investing in quality markets

Investing in a property that has high appreciation potential is vital for a good return on investment.  The South Indian market, for instance, has seen a huge surge in e-commerce and IT-related businesses, with cities like Bangalore, Hyderabad and Chennai offering very good returns on investment. To stay updated on real estate trends in India and the best upcoming localities to invest in, you can consider enlisting the services of a realty advisor. These advisors can also ensure that you avail property management services in all respects for both better safety and peace of mind.

Eligibility

NRIs are eligible to invest only in residential or commercial properties. They are not eligible to invest in any sort of agricultural farmlands or farmhouses. However, they are entitled to inherit these properties or get them in the form of gifts. In some rare cases, the court in your jurisdiction can approve a request to invest in these restricted properties, but these are only judged on a case-by-case basis.

Power of Attorney

A POA or Power of Attorney is a letter or document which allows a person to act and make decisions on behalf of another person, in this instance the NRI. If an NRI is unable to visit the country in order to participate in property transactions, he or she must ensure that Power of Attorney is delegated to a suitable person or organization to transact on his/her behalf, and that the document is duly registered to avoid fraud or disputes thereon. Your POA will be able to sign documents, inspect the property and act in your best interests in case you are not able to be physically present.

Choosing a reputed builder 

If you are an NRI, it is extremely important to choose a builder who is backed by a very good reputation in the real estate industry. Since you may not be physically present to check upon the status or the quality of the building, you need to be able to trust the builder you choose to invest in. A good builder will also have all the adequate clearances and certificates needed, which can help accelerate the process of buying your home.

Investing in commercial properties

If you are investing in a property for the sake of good returns, zero in on commercial properties which are in demand by blue-chip companies. This will ensure consistent returns and good capital appreciation. A well-located commercial property tenanted by a blue-chip company can fetch anywhere between 6-10% returns on invested capital, almost double that of the returns on residential property.

Investing in the Indian realty market can be very rewarding if you do your homework well. Seek out the right advice and ensure that you follow all the rules and regulations carefully before investing in real estate in India. As the economy develops and property values continue to soar, investing early can help you reap high returns in the future. If you are an NRI and aren’t sure about which property to invest in, head over to Assetz Property Group. Our exclusive range of luxury homes located in some of the best areas in Bangalore can help you find the perfect real estate investment!