Indians living abroad have their homeland India in mind and want to keep that emotional relation with the country. One of the ways for them to connect with India is to invest in Indian real estate. They buy homes or commercial properties in India and live there whenever they visit the country.
The Indian real estate market has many investment opportunities that non-resident Indians can explore. This sector is growing rapidly, which has resulted in ever-increasing investment from NRIs. They can invest in, for instance, residential flats in Lucknow and other metropolitan cities for high returns.
Key reasons for NRI investments in Indian Real Estate
While investment from NRIs in Indian real estate is growing, it would be wise to know its major reasons. Here are some factors why Indian real estate is attracting NRI investment.
Devaluation of the rupee
The Indian Rupee has devalued considerably against the US Dollar and other major currencies. That has resulted in the growing investments in the sector from the NRIs. For them, the sector becomes affordable for putting their money on different properties.
Attractive returns on investments
A key factor leading to every growing investment from NRIs in Indian real estate is attractive profits. The premium and luxury segments drive most investments from NRIs to earn high returns. They find real estate more inviting than risky stocks and cryptocurrencies.
Family connection
Another reason for NRI investment is that NRIs have their family in India, which builds emotional and family connections. That encourages them to buy residential and commercial properties in Indian cities.
Major NRI investment types in Indian real estate
Many investment options are available to the NRIs in the Indian real estate sector. This is because different types of properties are accessible for investment to cover all budgets. All the properties can be categorized into a few main types. Each property type has a specific purpose and objective for the buyers and investors.
Here are the main NRI investment types available in the Indian real estate market:
Residential properties
All the metropolitan cities such as Delhi-NCR, Bangalore, and Mumbai have plenty of residential properties. They can invest in them to create your rental income source or sell at high prices in the future. NRIs can invest in luxury villas, apartments, and other spaces in upscale neighborhoods. Luxury projects in Lucknow and other big cities are especially attractive to give significant returns.
Commercial properties
Most NRIs invest in commercial properties to start a retail business or simply want to invest. Due to high returns, NRIs often invest in office properties, shopping malls, and commercial hubs.
REITs (Real Estate Investment Trusts)
REITs also are a great way to drive investment in real estate. These trusts are of many types, including equity REITs, mortgage REITs (mREITs), and hybrid REITs. They are a way for NRIs to invest in big properties with multiple benefits, such as less diversified risks and liquidity.
For NRIs, the REITs are a source of regular income potential for regular income through diversification benefits, liquidity, dividends, and exposure to real estate assets without owning a property directly.
Under-Construction Properties
Under-construction or pre-launched properties are other types that NRIs can invest in to drive attractive returns. Investors especially prefer such properties for lower prices, which results in high returns in the future after the completion of the project.
NRI Investments regulations in Real Estate
Non-resident Indians must follow specific rules and regulations set by the Indian government when investing in residential or commercial properties. They should be aware of these rules to avoid any complications later when investing in all properties including freehold and leasehold property.
Here are the significant regulations concerning NRIs for investment purposes:
Properties where NRIs cannot invest
The RBI guidelines say that NRIs cannot invest in agricultural land. They are also not allowed to invest in farmhouses and plantation property.
Use funds from NRE
The guidelines also say that NRIs are required to essentially use funds from their NRE (Non-Resident External) accounts or NRO (Non-Resident Ordinary) accounts.
Repatriation of funds
Fund repartition is limited to only two residential properties. But there is no such restriction on commercial properties.
FEMA compliance
NRIs must comply with the Foreign Exchange Management Act (FEMA) guidelines before making any investments.
Wrapping Up
Indian real estate sector is growing rapidly, creating investment opportunities for NRIs. They can explore a wide range of residential and commercial properties for higher returns in the future. The devaluation of the rupee against the Dollar and family connections in India are the key reasons for NRI investment in Indian real estate.
