How NRIs May Gain By Investing In India Now

According to a research by industry body Associated Chambers of Commerce and Industry (ASSOCHAM), NRIs contribute to 18 per cent of property sales in India. In past few years, NRI investment in the property market surged, especially from expatriates in the UAE, Singapore, Canada, Australia, the UK and South Africa. After an investor-friendly government took charge at the Centre, such investments are expected to grow further. NRI investments may go as high as 30-35 per cent of the total home sales in India this year, says the report.

Here is why it's the best time for NRIs to invest in India.

Increasing value

Market gurus predict returns of property investment in India may go as high as 20-25 per cent. The returns from a good investment is expected to go as high as 30-40 per cent in the long term. This could be a great opportunity for NRIs living in countries such as the US, UK and Australia, where returns on property are not as high as in India.

Circle rates in many areas may also go up by at least 10-15 per cent, further hiking rates. Circle rates are the minimum rate at which a property can be sold, as is fixed by government authorities.

Favourable regulations

Easy regulations and lesser paperwork also make it easy for NRIs to consider India as a property destination. Now, an NRI with an Indian passports can buy immovable property that is not agricultural or farm land. Money can be routed to India via a Non-Resident External/Non-Resident Ordinary (NRE/NRO) account and the deal would not require any permission from the Reserve Bank of India.

The proceeds of a sale can also be repatriated via authorised dealers without any government approval, if the amount does not exceed $1 million.

The government also discounts capital gains tax on proceeds of a property sale, if they invest again in another property. India also allows NRIs to draw a loan of up to 80 per cent of the value of a property, to be disbursed in Rupees.

The falling Rupee

Value of the Indian Rupee has recently declined against the US Dollar and other foreign currencies due to a devaluation of the Chinese currency, Yuan. While the Rupee depreciates against other currencies, NRIs will be able to purchase property in India at a much lower cost. The currency market is a volatile phenomenon and the Rupee may gain strength in future, making investments here costlier. NRIs would be able to gain from a falling Rupee only by making their investment before it bounces back.

Schemes & offers

Well aware of the market conditions, real estate developers are attracting NRIs with exclusive offers. A number of high-end luxury condominiums in India are marketed and sold via exhibitions abroad, targeting high net-worth Indians (HNIs) and cash-rich NRIs. To make these offers more lucrative, builders also offer to take care of the paperwork (registration of the property, etc). Developers' body Confederation of Real Estate Developers Associations of India (CREDAI) is also making efforts to ensure more NRI investment in the country by easing the process. Apart from this, upcoming infrastructure projects such as the Smart City Mission would also bring new opportunities for NRIs.

(Katya Naidu has been working as a business journalist for the last nine years, and has covered beats across banking, pharma, healthcare, telecom, technology, power, infrastructure, shipping and commodities.)