NRIs should continue to invest in real estate sector; here's why

Rohit PoddarUpdated: Saturday, February 12, 2022, 03:12 PM IST
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The government’s strategy on liquidity infusion that resulted in a reduction in home loan rates further set the stage for a fast recovery | proptiger

The investments from non-resident Indians (NRIs) in India have seen a rapid rise as soon as the lockdown was imposed. In the first quarter of the last financial year, investments from the expat community decreased if we compare it to the same quarter last year. However, soon developers showed ample attractive payment plans and improved the digital medium to create resilience.

The government’s strategy on liquidity infusion that resulted in a reduction in home loan rates further set the stage for a fast recovery. By the end of the second quarter, the investments from NRIs increased by 18 percent, as per the 360 Realtors’ report. The reduction of the stamp duty in states like Maharashtra also helped in developing increased growth.

As per the information points shared by the 360 Realtors’ report, GCC continues to be the major source of NRI investments in India. Collectively, GCC accounts for approximately 41 percent of the total investments. Investment inflow in the real sector from the expat community in the USA includes 17 percent of the complete purchase, followed by Singapore (12 percent). Other major source markets include the UK, Kenya, Germany, Canada, South Africa, among others.

A striking point that has started in the present NRI report by 360 Realtors is incremental growth in average ticket size. Earlier reports have shown a dip in average ticket sizes. However, after the pandemic, most home buyers are now looking for a larger house, which has made the ticket sizes increase.

The NRI real estate investment is a remunerative choice. However, there are legal formalities that the NRIs should know before owning or purchasing immovable property in the country within the FEMA. The FEMA means for Foreign Exchange Management Act. The Reserve Bank of India has allowed the NRIs to buy any residential or commercial property, through a circular. This means that the NRI can purchase property in India.

The NRI investor doesn’t require any certain allowance from the Reserve Bank of India. Besides, no other communication is needed to send to the RBI. With the general allowance existing, an NRI can purchase any number of both residential and commercial properties. Also, the income tax laws allow an NRI to own or purchase as many properties as one can.

If the NRI is not able to visit India, then the required documents for purchase of property can be executed by another person who has been given the Power of Attorney. One common thing in the life of NRIs is that they are don’t have time. They earn well, but they don’t have enough time to make informed decisions on things affecting their finances. They require support and suggestions on how to manage their money.

A large number of the NRIs remit money to their banks, to their hometown, and place them in FDs (fixed deposits), with a thought to double their income. The rise in property prices is a good opportunity for NRI investors, and especially those NRIs who wish to invest in a home back home. NRI investors should majorly focus on real estate. The value of the rupee has also strengthened against the value of the dollar in the past few months and its continued rise will make Indian real estate a worthwhile investment in the upcoming years.

(The writer is Managing Director, Poddar Housing & Development Ltd)

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