NRI investments in India
Presently, Indian real estate is a very attractive investment option for most NRIs. However, since they live abroad, it becomes more necessary for them to do proper due diligence before risking their money.
Necessary checklist for NRI investments in India
- Nowadays, many Indian developers conduct roadshows in abroad. NRIs should not be fully convinced by glossy brochures and impressive presentations. They should have someone trusted visit the property’s site and check the ground realities. Like all real estate investments in India, the location of the project should be attractive and should enjoy good connectivity.
- Pricing is another important issue. Often, the prices quoted by builders to buyers abroad, are higher than those quoted to domestic buyers. Also, builders don’t offer discounts when selling abroad.
- In such a situation, the international buyer must learn the rate at which the project is being sold in India.
- Furthermore, they should avoid paying a large part of the cost upfront. In such systems, a small portion of the payment is paid upfront at the moment of booking, and the rest balance is paid on possession of a property. Better still, they should opt for finished apartments to avoid the risk of delay in possession of flat.
- It may also be advisable for NRIs to take a small bank loan, even if they don’t need the money. Since when an NRI takes a loan, the bank will do the due diligence on their behalf. It will check whether the developer owns the land on which he/she is developing the project and has obtained the needed licenses. This will avoid a lot of trouble.
Understanding the law
NRI investments in India must understand the laws that rule real estate transactions. There are, for example, restrictions on how promptly the profit from a real estate transaction can be repatriated. NRIs also need to determine whether their gains will be governed to double taxation.
Watch out for
Unlike India, the real estate sector in the developed markets is better governed and more evolved. Here, buyers are usually subjected to a lot of troubles. Unless an NRI has a trusted person running errands in India, purchasing real estate in India could be challenging. Then there’s the administration of the property as there are not many organizations in India still that offer such services. This makes it all the more crucial that an NRI has a legal advisor to collect the rent and also look after its maintenance.
The method of mean reversion suggests that revenues from real estate, are expected to be lower than they have been in the recent history. Therefore, NRI investments in India mainly in the residential real estate at this point of time should have reasonable return expectations over a long-term period. Finally, NRIs also need to be alert that the depreciation of the rupee upon their home currency, will also possess a bearing on their returns.