In recent years, non-resident Indians (NRIs) have begun to invest in Indian real estate, a trend that promises significant returns. With the growth of the Indian economy and various government initiatives, the real estate sector in India offers promising opportunities for NRIs. Furthermore, It is predicted that the Indian real estate industry is expected to grow to a turnover of $650 billion by 2025, indicating a substantial potential for returns. This also shows that the GDP contribution of real estate investment in India will increase from 7% to 13%.
Implementing the RERA Act has significantly changed the Indian real estate market, particularly for NRI investors. This act has enhanced the transparency of property transactions, making it a more attractive investment option. For instance, when an NRI purchases a property declared self-occupied, they can enjoy various tax benefits, including exemption from property tax. Understanding these critical parameters is crucial for NRIs to navigate the real estate market in India.
However, this guide simplifies the process and provides a comprehensive overview of NRIs investing in Indian real estate.
Here is a complete Guide To Real Estate Investment In India
Kind of Real Estate Investment NRI Should Know
As an NRI, you can only invest in residential properties or commercial properties in India. There is no limit to owning a residential or commercial property with valid documents. However, government laws prevent you from purchasing agricultural land, farmhouse or plantation property. The most extensive NRI real estate investment options include commercial and residential properties.
Moreover, it is essential to note that if an Indian resident owns agricultural land or agricultural land and subsequently becomes an NRI, his NRI status does not extinguish the farmland ownership.
Determining budget:
Setting a budget is the second step to investing wisely in residential or commercial property in India. As an NRI, you should assess your financial position and determine how much you can invest without putting it at risk. This includes accounting for home loan EMI, down payment, registration fees and other applicable expenses. Maintaining a buffer to reduce financial stress during expenditure overruns or unexpected events is also advisable.
Rise Infra Internationa will help you understand the process and create a budget that meets your investment objectives. People should analyze the cost structure to carefully allocate their budget for a desired luxury residential or commercial property in India.
It includes the following parameters:
Essential cost of the property (includes base price per square foot and charges like floor rise charges, preferential location charge (PLC), etc.)
Additional costs (including Goods and Services Tax (GST), stamp duty and registration charges, brokerage charges, maintenance and upkeep, legal fees and home loan-related charges)
Other miscellaneous expenses (including utility connection charges, society membership fees, etc.)
Choose a Suitable Real Estate Project
After determining the budget, the NRI should clearly understand the type of property and the purpose of purchase. They also need to decide whether to go for a ready-to-move-in project, an under-construction property, or a commercial property like an SCO plot.
Generally, real estate investment by NRIs can be profitable if they invest in pre-launch projects and SCO plots. These are usually available at relatively low prices. Also, look for projects in a prime location with excellent connectivity, modern amenities, and legal status.
If we talk about under-construction real estate projects, proceed with caution. There have been several cases of delayed possession or late handing over (for various reasons) to customers in many cities. Thus, it is best to avoid under-construction properties but choose when the builder has a solid reputation for timely delivery of projects.
It's crucial to always opt for reputable builders with a proven track record. Look for builders known for their timely project delivery, quality construction, and excellent after-sales service. This will ensure the quality of your investment and provide you with peace of mind.
Working with a reputable and registered builder is crucial when choosing a property. This ensures that all necessary approvals, permissions, and certifications are in place, providing peace of mind. Rise Infra International, India's No. 1 real estate property consultant, is an ideal partner in this journey. They will guide you in selecting the perfect real estate project or builder, ensuring a secure and confident investment.
Modes of Payment When Purchasing Property in India
NRI investing in real estate in India necessitates significant capital, and the transaction must be completed through Indian banks. Therefore, you need an NRE/NRO account with an authorized Indian bank.
Both types of accounts have different meanings.
- NRE account allows you to use your foreign income to maintain and execute foreign transactions in India.
- An NRO account involves managing your earnings made in India. Depending on your utility needs, you can choose either of the two.
Home Loans Financing
It is essential to thoroughly research and compare different financial institutions that provide home loans to NRIs. Then, they must submit a loan application with all relevant papers.
Regarding home loans, it's essential to conduct thorough research and compare different financial institutions that provide loans to NRIs. As per RBI guidelines, an NRI home buyer can secure a loan from Indian banks for approximately 80% of the total property funds, depending on their credit score and other criteria. The remaining 20% of the property's value should be planned to come from your income. However, it's important to note that the loan cannot be directly credited to your bank account and will be kept in the seller's escrow account. Loan repayments can be made through NRO or NRE accounts.
Documents Required
For general purposes and to buy property in India, you will need these essential documents: your Indian passport, Green Card or PIO/OCI card, and your PAN card. The PAN card is required for property transactions.
Moreover, you are taking a home loan. In that case, you will have to show your passport or OCI/PIO card, work permit/employment contract to establish that you are a resident of the foreign country, last six months' pay slips, income tax return, later 1- NRE or Yearly bank statements of NRO accounts, and bureau reports of the country of residence.
In simple words, the document requirements are as follows:
- Passport/ OCI card/ PIO card
- PAN Card
- Address Proof for India and a Foreign Country of Residence
- Income Proof: Country of Residence and India (where applicable)
- NRE/NRO Accseller's FCNR account (if you want to take a home loan in foreign currency)
Following Legal Due Diligence:
The NRI should conduct extensive due diligence on the entire property. This process includes documentation of the property's ownership, approved building plan, height/aviation environment clearance, etc.
They should also conduct a title certification search for the property to ensure the transferor's title is reliable and correct. They must obtain a no-dues certificate for existing water charges, electricity bills or property taxes.
All dues must be cleared and paid. The existing mortgage on the property could pose a problem. Additionally, NRIs must verify that the project is registered under the Real Estate (Regulation and Development) Act (RERA), ensuring buyer protection.
Find a Trusted Real Estate Consultant In India
After thorough research, choosing a budget, doing due diligence and completing all the necessary processes, the final step is choosing the right property consultant in India. This is important for NRIs looking to invest in real estate in India.
To locate such professionals, NRIs can contact Rise Infra International, specializing in real estate advisory services. Websites like riseinfrainternational.com provide comprehensive listings of properties in different cities of India. These real estate consultants offer complete information about the property and a site inspection, which helps you make an easy selection.
Conclusion
Real estate investment in India has been highly successful for NRIs due to several underlying variables, including rupee depreciation, future investment appreciation and attractive schemes and discounts builders offer. This guide on NRI real estate investment in India will walk you through the process of purchasing property in India.
If you are an NRI looking to buy real estate property in India, Rise Infra International offers a wide range of real estate projects. Whether you are looking for residential or commercial properties for sale, we can provide them in the best cities to buy property in India, namely Mumbai, Delhi, and Gurgaon.
