Real Estate Industry in India: Complete Guide
Indians living abroad are called Non Resident Indians.They are overseas citizens of India who are not resident in the country.The expats are one of the richest communities in the world. The community’s interests inherently spiral towards India and why not, their roots lie here.
The trends these days indicate that NRIs are increasingly investing in real estate in India. Reports by 360 realtors state that NRI investment is expected to grow by 12% this year. The stats for last year being $13.1 bn, the real estate market is growing by leaps and bounds. This investment ensures that NRIs get a great ecosystem to live in as well as the facility to build a home in India.
Lets see various aspects related to the real estate investment by NRIs.
What Is Real Estate?
Real estate is a land, property, building etc that constitutes a permanent structure. This can be commercial, residential, industrial or special use such as hotels, theater, hospitals etc. People all over the world want to invest in real estate because they believe that this investment can appreciate over a long period of time. It is a tangible asset and holds sentimental value too . An NRI buying real estate in his/her home town or city would have special significance as it would be an attempt to cling on to their roots.
Why Is Real Estate Investment Important?
Real estate investment is preferred world over and in some areas and cultures is considered a very important investment and even a milestone to mark in one’s life! Real estate investment provides one stability and is a method to ensure you have a roof over your head as well as a great asset at your disposal if you need liquidity at later points of time. There are other types of stabilities that a real estate investment offers you depending on your needs and wants.
Investing in real estate also gives social security to NRIs in the form of home building in India.
Rules For NRIs to Invest in Real Estate in India
There are certain rules that apply to NRIs when they are investing in India.
RBI Approval is Not Required:
RBI has deliberately eased the norms for NRIs to facilitate and encourage their investments in India. They can invest through the automatic route which has simplified the otherwise complicated process of investment for the community.
NRIs do not need permission from the authorities to acquire any immovable property other than a few exceptions.
When selling/ renting/ buying property
The purchase must be made from the following:
Funds from any NRI account maintained by RBI.
Normal banking channels that receive funds through the means of inward remittance from outside India.
Care must be taken that Traveller’s Cheques or foreign currency notes must not be used for any sort of payments. Infact, no other mode of payment shall be used except for those mentioned in the above points.
No permission is required for NRIs to transfer any property in India other than a few exceptions such as agriculture
NRIs can easily rent out their immovable properties in India without any permission from RBI.
Inheritance of property
NRIs do not need any permission for acquiring any property except for:
- Agricultural property
- Farm house
- Property used for plantation
- Though the clause applies only and only when the said property is acquired through:
- Gifts from relatives (resident in India)
Inheritance from a person living outside India who might have acquired it under any provisions of the foreign exchange law prevalent during that time.
In case the investments are not approved by the authorities when done through the automatic route, the request must be made to Chief General Manager, Reserve Bank of India
NRIs are eager to invest in real estate in India because they are bullish on the prospects of India as an emerging superpower. It helps that at present, India is the fastest grooming economy in the world and NRIs can ignore it only at their peril. The attachment to the roots combined with the financial prudence of investment in an asset class that is expected to appreciate well in the long term is what is bringing back NRI real investments to India big time.
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