The world came to a standstill ever since the spread of COVID-19. Countries were forced to close international borders and enforce lockdowns to stop the virus from spreading further. Economies collapsed and investors refused to take risks as uncertainty took over our lives.
Even the most reliable investment sectors like real estate took a toll in 2020. It wasn’t until the first quarter of 2021 and easing away of lockdowns in the countries that the investment sector gradually started to look up.
When it comes to the investment sector in India, real estate has proved to be resilient as NRIs reported investing $13.3 billion in the 2021 financial year. While the real estate market has been one of the most popular investment sectors for NRIs, the current times promise to be highly profitable and promising. In today’s blog, we discuss the reasons which make the Indian real estate market lucrative and worth investing in.
What makes the Indian real estate market an ideal investment opportunity for NRIs?
Believe it or not, NRIs feel extremely homesick at some point in their lives as they live thousands of miles away from their home country. In such cases, one of the best ways to gain a connection with their roots comes from owning property. It provides them with an opportunity to realign their identity and gain a sense of being an Indian.
Another reason which is responsible for steady growth in NRI investments in real estate is to simply own personal space. Many non-resident Indians spend their entire lives working in different countries. But when it comes to their retirement, they choose to come back home. Owning property in India makes this process easier for them. Some people also consider investing in the real estate sector because of its steady development, making it an ideal choice for increasing assets. Thus, instead of sitting on the fence, make your move and invest in flats in Adyar!
Why is the current moment most favourable for NRIs to invest in Indian real estate?
There are several reasons why buying flats in Adyar and various other upcoming neighbourhoods at present times is the most favourable investment for NRIs. Let us go through them:
1. Real Estate Regulation Act (RERA)
Prior to the establishment of the RERA, builders were not legally accountable for diverted funds and delaying projects. But NRIs are presented with the RERA that provides buyers with immense security and minimizes risks owing to its strong grievance address system.
With RERA, 70% of the total fund of a project must be deposited by the builder in escrow accounts. Moreover, the funds in the escrow accounts can only be accessed from time to time. Without proper proof that states project requirements, no builder can make any ill use of the money.
2. Grab the best home loan deals
In case you are considering investing in land for sale in Mannivakkam right now, this is a great time. Home loans are being issued at record low-interest rates (6.5%). Moreover, NRIs are eligible to finance 80% of the total property value through a home loan.
3. Tax benefits
NRIs have the liability of paying tax against the capital gains that are on the rise in India. Any immovable property that an NRI owns for more than 2 years is counted as a capital asset and is included under the indexation benefit along with taxation at 20%. NRIs also enjoy tax deductions under Section 80C to 80TTA which they can use to reduce their burden of taxes.
4. Payment rules
NRIs can send money to the seller in India by directly transferring funds from his or her account or transacting through their NRO accounts.
What kind of properties can NRIs choose to invest in?
As per the circular released by the Reserved Bank of India, NRIs can buy any kind of residential property or commercial property. This rule allows NRIs to invest in various upcoming projects. One such example is Adyar. As an NRI, buying flats in Adyar would be an excellent choice of investment as it has been emerging as one of the most promising neighbourhoods in south Chennai.
Since general permission already exists, NRIs are not required to send any prior intimation to the RBI regarding their investments in real estate. Moreover, NRIs can also own as many properties as they want, thanks to the income tax laws permit. In situations where an NRI is not able to come back to India for the purchase and documentation, he or she can also appoint an individual with Power of Attorney to execute the transaction.
But there are some limitations for NRIs regarding their investment. As stated above, NRIs cannot buy or invest in any kind of agricultural property or land. This law extends to any kind of plantation and farmhouse as well. If you are an NRI and you are keen to invest in any such property, you need to obtain special permission from the RBI.
What is joint ownership of property?
Consider the following situation- Richa and Dinesh are NRIs. They have been considering buying a plot for sale in Mannivakkam. In this case, they can choose to be a single owner or joint-owner of property in India. However, this joint ownership will be nullified if one owner is an Indian resident or a person who does not have permission to become a property owner in India.
Expats and NRIs have an incredible opportunity of investing in the Indian real estate sector and enjoy profits. However, one should always conduct proper research and verification of projects prior to investment.
