Indian Real Estate market is one of the most robust and fast growing property markets in the world. Jones Lang LaSalle, the leading International investment consultant firm, has ranked India and China at the top on its list of 20 nations globally chosen on the basis of their growth potential in the real estate sector in 2012.
As an Indian citizen overseas or as a PIO, you are fully entitled by the law to invest and profit from the Indian Real Estate market. But there are certain complexities faced by the non-residents in terms of, difficulty in:
Finlace Consulting’s NRI Realty Solutions (FNRS) serves to address these barriers. The package along with our resolution to bring professionalism and transparency in Real Estate in India offers a complete peace-of-mind solution to the non-resident investors and home-buyers.
Risks associated while buying in India
While investing in real estate in India can be a smart move there are several pitfalls which one needs watching out for in order to secure the investments.
Tax Implications for Buying Property in India
The NRI will have to pay the stamp duty and the registration fee while purchasing but will have no additional tax due at the time of the purchase.
Can such propery be sold without the permission of Reserve Bank?
Yes. Reserve Bank has granted general permission for sale of such property. However, where another foreign citizen of Indian origin purchases the property, funds towards the purchase consideration should either be remitted to India or paid out of balances in non-resident accounts maintained with banks in India.
Can sale proceeds of such property if and when sold be remitted out of India?
In the event of sale of immovable property other than agricultural land/farm house/plantation property in India by an NRI or PIO, the authorized dealer may allow repatriation of the sale proceeds outside India, provided all the following conditions are satisfied: -
China and India are sitting comfortably on top of the list of 20 nations globally chosen on the basis of their growth potential in the retail real estate sector, as per the new research report titled ‘Redefining Retail Investment’ 2012 by the leading international investment and services firm, Jones Lang LaSalle.
It is also evident from the robust recovery of the industry during the latest recessionary period compared to other realty and investment markets worldwide.
This was despite some of the adverse economic regulations such as heavy interest-rates and liquidity-crunch in the market. Now, as the government has displayed strong will to provide the required boost to the real estate market through policy reforms, the trend is only expected to improve from here. Hence we concur it is a good time to invest.
In Finlace’s view, Indian Real Estate market offers good investment opportunity if the investor has a reasonable holding power. While the market is always susceptible to short-term fluctuations based on market sentiments, the long-term outlook holds definite signs of growth fuelled by significant factors such as the Indian economic growth and consistent rise of its middle-class.
NRI’s Investing in India
There are no restrictions for an NRI (Non-Resident Indian) on investing in the Indian real estate market. The federal government has considerably eased entry norms for NRI investment in real estate.
Permission for purchase of Residential property / Commercial property
Type of Investments for an NRI in Indian Real Estate
ASSURED RETURN is a financial scheme offered by developers against property offered. Under such schemes, an investor signs an agreement with a developer and is assured of a monthly return till the time of possession, at an agreed rate of interest. In case the developer enters into a tie-up with the owner or investor for a few more years after the date of possession, the developer finds a tenant on a rent sharing agreement.
The developers offer interest of anywhere between 10-12 per cent per annum and pay through post-dated cheques till possession.
As per FEMA 1999, NRI is an Indian citizen who is resident outside India for purpose of employment or carrying on business or vocation in circumstances as would indicate an intention to stay outside India for an indefinite period. An Indian Citizen will also be considered NRI if his/her stay in India is less than 182 days during the preceding financial year.
A non-citizen of India is deemed as Person of Indian Origin (PIO) if he is not a citizen of Pakistan or Bangladesh and if he at any time held an Indian Passport, or he or any of his parents or any of his grandparents was a citizen of India.
Under the general permission available, NRI and PIO can purchase residential and commercial property in India. No special permission is required and no document is required to be filed with RBI for this. This general permission, however, does not apply to purchase of agricultural land, plantation property or farm house in India.
No, there is no restriction on the number of residential or commercial properties that can be purchased.
An NRI can sell his residential/commercial property in India to:
A PIO can sell his residential/commercial property in India to:
An NRI / PIO can sell his agricultural land / plantation property / farm house in India to an Indian citizen residing in India.
An NRI / PIO can gift his residential/commercial property to:
An NRI / PIO can gift his agricultural land / plantation property / farm house in India to an Indian citizen residing in India
An NRI / PIO can mortgage his residential/commercial property to:
An NRI / PIO may repatriate proceeds from sale of immovable property other than agricultural land / farm house / plantation property in India provided the repatriated amount does not exceed,
In case the property is acquired out of Rupee resources and/or the loan is repaid by close relatives in India, the amount can be credited to the NRO account of the NRI / PIO. The amount of capital gains, if any, arising out of sale of the property can also be credited to the NRO account. RBI allows repatriation of up to USD 1 million per financial year out of the balance in the NRO account.
Yes, he can repatriate the amount not exceeding the loan amount repaid by him out of the foreign inward remittances received through normal banking channel or by debit to his NRE/FCNR accounts. The balance amount, if any, can be credited to his NRO account. RBI allows repatriation of up to USD 1 million per financial year out of the balance in the NRO account.
Yes, NRI / PIO can rent out the property without the approval of the RBI. The rent received can be credited to NRO/NRE account or remitted abroad.
Yes, an NRI / PIO may be granted loan by an Indian Bank / Housing Finance Institute for purchase of residential property in India, subject to following conditions:
The installment of loan, interest and other charges can be paid by the borrower by
The criteria and documents required for applying to different banks may differ as per the guidelines of each bank. Below is an indicative list of documents that may be required for home loan.