5 Reasons Why Young NRIs Invest More in Indian Realty
NRIs, or Non-Resident Indians, play an increasingly important role in the Indian real estate market. In fact, according to a recent report by Jones Lang LaSalle, NRIs accounted for around 15% of all residential property transactions in India in 2017.
There are several reasons behind this trend–
Firstly, Indian real estate is currently undervalued as compared to other global markets. This makes it an attractive investment opportunity for NRIs to park their money in a safe and profitable asset class.
Secondly, the strong growth potential of the Indian economy makes real estate here a very lucrative investment option.
And lastly, with the recent implementation of RERA and GST, the Indian real estate sector has become much more transparent and trustworthy, making it an even more attractive proposition for NRI investors.
Benefits of Currency and stable pricing
The Indian real estate market presents stability in pricing structure even with rising inflation. Moreover, the Indian economy favours a rising demand, subsequently rewarding with high appreciation in future housing prices. Simply put, NRIs can expect a high ROI on real estate, so investing young for higher future returns is better.
The other aspect of the Indian economy is the currency exchange that allows NRIs to invest without fretting about the budget. Hence, most even prefer to invest in luxury properties in Mumbai, Bangalore, Pune and other metros.
Government policies for NRIs
The Foreign Exchange Management Act FEMA was passed by the ordinance of the central govt to ease cross-border payments. The capital account caters to the money-related transaction that will help NRI investment in Indian real estate. This also warranties a secure transfer of your money since every transaction under the FEMA act is processed through authorised persons, thus easing the home buying process.
Rental Returns
With an array of NRI investment options, it yields a stable passive income with uniform rental returns. The FEMA act deducts a mere 30% TDS of the total revenue earned through the rents.
With several benefits to NRIs, the second home investment seems more feasible, thus increasing your ROI and rental returns.
Retirement Security
Homeownership at a young age is planting a seed for a tree of great shelter. NRI millennials are investing in real estate in India with two intentions:
- To have exponential appreciation in the long run.
- And to move back to their roots after retirement for a secure living.
A reverse mortgage is a financial arrangement where homeowner gives up their home equity in exchange for regular payments as their retirement income. The benefit of this reverse mortgage is that the income through this is non-taxable, which bodes well for retiring NRIs.
Tax Benefits
- Section 80 C– maximum deductions on repayment of principal amounts is 150000 p.a.
Plus, avail deductions for registration charges and stamp duty.
- Section 24– under the head ‘income from house property’, deduction on repayment of interest on home loans up to 200,000 p.a.; even if the property is in the pre-construction phase.
- Section 80EE– home loans for NRI to buy their first home with an additional deduction of 50,000 p.a.
CONCLUSION
With these many benefits for NRI, here is a quick property investment guide–
So, should you buy a home early in your life?
The answer is that the earlier you start investing in real estate, the better the returns will be. Home loan eligibility criteria also offer lower interest rates if you fall under the younger age bracket.
Now the question is, where should you invest?
Property in Pune, Mumbai, and Bangalore are currently attracting an influx of NRI investors due to an assortment of projects that yield high rental returns. Thebest way to invest in India for NRI is to assess the location— the cities with upcoming infrastructural developments have higher valuations.
What projects are preferable?
Kolte Patil Developers are a renowned real estate brand if you want tobuy property in Pune. Furthermore, the premium properties in Mumbai and Bangalore offer luxurious investments for NRIs. Browse the website to know more about the broad catalogue with easy provisions for NRIs to buy a property.
FAQ:
Q: Is real estate a good investment for NRIs in 2022?
A: The post-pandemic market recovered significantly in 2022, making it a favourable investment time.
Q: Why should NRIs invest in properties in India?
A: The luxury segment in Mumbai and Pune are at the peak of the decade after a slump of four years. NRIs can invest in this segment for higher ROI or if they want a good home after retirement.
Q: What is the expected future of the real estate market in India?
A: With several infrastructural developments in cities other than metros, the real estate market is set for a boom as more people will shift to cities like Pune, Hyderabad, Kerala, etc.
Also, due to employment hubs, people will migrate to these cities, thus yielding the homeowner considerable rental returns.
Q: For an NRI, what would be the best time to invest in property?
A: Since the real estate market is starting to regain momentum, this is the best time to invest in a property to enjoy maximum appreciation.
Q: How can an NRI purchase residential real estate?
A: You must consider the following:
- Passport/OCI card
- PAN card
- Power of Attorney
- Work permit/employment contract/appointment letter of your country of residence
- Latest salary certificate / Payslips for the last six months
- Latest income tax returns
Sources:
https://rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=11441
https://www.yesbank.in/life-matters/5-tax-benefits-of-taking-nri-home-loans-in-india
