NRI Real Estate Investment in India
Despite the uncertainty almost everywhere, the Indian real estate market appears to be flourishing. Buyers’ activities have become more active and NRI’s customer satisfaction has also increased recently. Thus, most real estate agents today rely on NRIs for their sales. Additionally, by 2021, NRI real estate investments in India are expected to reach $13.1 billion. NRIs from developed countries like UK, USA, Germany, France ,Italy and Canada are already doing big business in India. India’s growing financial system has further encouraged expatriate Indians to look to their country as a return option in the future. As a result, investment in real estate, which accounts for 42% of GCC’s total income, has increased. Interestingly, the investor population includes people between the ages of 35 and 45 who are looking to invest in a home for their parents. Aged 55-70, looking forward to buying their own home in old age.
Why NRI Property Investment in India?
Several reasons have lured NRIs to invest in a lucrative avenue of the Indian real estate market.
- Strict regulatory measures
- A significant drop in the rates of property
- Increased transparency in procedures
- Great consolidation in the sector
- The recent depreciation in the Indian Rupee
In addition to the above reasons, a paradigm shift in the economy during the last few years is a growth booster for India.
The Indian economy as of today is above 2 trillion dollars.
Why NRIs Should Invest in Indian Lands
As per several reports, India’s current NRI investments will be hitting an all-time high of INR 96 CR in FY 2021. The formation of RERA attributes to this all-time high real estate investment. NRI buyers now have more confidence to invest in India. They get a more simplified format of engagement and trustworthy developers and properties currently registered under RERA.
The Rapid Growth of the Market
The Indian market is growing fast, and Indian investors are now shifting their focus t o stock-based tools against traditional investments. The booming market and stock prices have made it a good time to invest in India.
Robust Economy
India has withstood the global financial crisis by having an economy with quality, resilience, and transparency and is supported by a strong banking sector.
Eminent Markets
Indian Stock Exchange is one of the oldest and biggest stock exchanges in the world. It is efficient, lower cost, and has a modern environment with returns on investment of over 15% per annum for the last decade.
Diversity in Investors
Due to the strong service sector, there has been a wide range of industries available for investment. Investors are also learning to gain enough understanding to invest in a knowledge-based industry.
Demographic dividend
India being the youngest country, almost 64% of the total Indian population falls under the working-age group. Thereby there is a lot of scope and potential for productivity and innovation, thus enhancing economic growth.
Real Estate Investment for NRI FAQ's
As defined by the Foreign Exchange Management Act of 1999 (FEMA), Non Resident Indian (NRI) is a citizen of India, who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. Non-resident foreign citizens of Indian Origin are treated at par with Non Resident Indian (NRIs).
Yes, foreign nationals of Indian origin, whether Resident in India or abroad, have been granted general permission to purchase immovable property in India.
The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE/ FCNR accounts maintained with banks in India.
NRI/PIO can avail of housing loan in Rupees from an Authorized Dealer or a Housing Finance Institution subject to certain terms and conditions laid down in Regulation 8 of Notification No. FEMA 4/2000-RB dated May 3, 2000 viz. Foreign Exchange Management (Borrowing and lending in rupees) Regulations, 2000, as amended from time to time. Authorized Dealers/ Housing Finance Institutions can also lend to the NRIs/ PIOs for the purpose of repairs/renovation/ improvement of residential accommodation owned by them in India. Such a loan can be repaid (a) by way of inward remittance through normal banking channel or (b) by debit to the NRE / FCNR (B) / NRO account of the NRI / PIO or (c) out of rental income from such property; or (d) by the borrower’s close relatives, as defined in section 6 of the Companies Act, 1956, through their account in India by crediting the borrower’s loan account.
The Non-Resident Indians who are staying abroad may enter into an agreement through their relatives and/ or by executing the Power of Attorney in their favour as it is not possible for them to be present for completing the formalities of purchase (negotiating with the builder or Developer, drafting and signing of agreements, taking possession, etc.). These formalities can be completed through some known person who can be given the Power of Attorney for this purpose. Power of Attorney should be executed on the stamp paper before the proper authorities in foreign countries. Power of Attorney cannot be drafted on the stamp paper bought in India.
The Non-Resident Indians who are staying abroad may enter into an agreement through their relatives and/ or by executing the Power of Attorney in their favour as it is not possible for them to be present for completing the formalities of purchase (negotiating with the builder or Developer, drafting and signing of agreements, taking possession, etc.). These formalities can be completed through some known person who can be given the Power of Attorney for this purpose. Power of Attorney should be executed on the stamp paper before the proper authorities in foreign countries. Power of Attorney cannot be drafted on the stamp paper bought in India.
They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Mumbai within a period of 90 days from the date of purchase of immovable property or final payment of purchase consideration along with a certified copy of the document evidencing the transaction and bank certificate regarding the consideration paid.
Yes, NRI/PIO can rent out the property without the approval of the Reserve Bank. The rent received can be credited to NRO / NRE account or remitted abroad. Powers have been delegated to the Authorized Dealers to allow repatriation of current income like rent, dividend, pension, interest, etc. of NRIs/PIO who do not maintain an NRO account in India based on an appropriate certification by a Chartered Accountant, certifying that the amount proposed to be remitted is eligible for remittance and that applicable taxes have been paid/provided for.
No specific permission is required by Non-Resident Indian nationals to acquire immovable Property in India other than agricultural/ plantation/ farmhouse.
No specific permission is required by Non-Resident Indians to transfer any immovable property in India to a person resident in India.
No specific permission is required for said transfer of any immovable property, other than agricultural, or plantation property or farm house.
NRI/PIO may repatriate the sale proceeds of immovable property a) If the property was acquired out of foreign exchange sources i.e. remitted through normal banking channels/by debit to NRE/FCNR (B) account. The amount to be repatriated should not exceed the amount paid for the property: 1.In foreign exchange received through normal banking channel 2. By debit to NRE account (foreign currency equivalent, as on the date of payment) or debit to FCNR (B) account. Repatriation of sale proceeds of residential property purchased by NRI/PIO out of foreign exchange is restricted to not more than two such properties. Capital gains, if any, may be credited to the NRO account from where the NRI/PIO may repatriate an amount up to $1 million, per financial year, as discussed below. b) If the property was acquired out of Rupee sources, NRI or PIO may remit an amount up to $1 million, per financial year, out of the balances held in the NRO account (inclusive of sale proceeds of assets acquired by way of inheritance or settlement), for all the bonafide purposes to the satisfaction of the Authorized Dealer bank and subject to tax compliance.
With a view to allow credit to NRE/ FCNR account of refund of purchase consideration by seller on account of cancellation of bookings/ deals for purchase of Residential, commercial property, Reserve Bank clarified that it will be in order for authorized dealers to allow Non-Resident Indians/ Persons of Indian Origin to credit refund of application/ earnest money/ purchase consideration made by the housing building agencies/ seller on account of non-allotment of flat/ plot/ cancellation of bookings/ deals for purchase of Residential commercial property, together with interest, if any (net of income tax payable thereon),to NRE/ FCNR account, provided, the original payment was made out of NRE/ FCNR account of the account-holder or remittance from outside India through normal banking channels and the authorized dealer is satisfied about the genuineness of the transaction.
The Chief General Manager, Reserve Bank of India, Central Office, Exchange control Department, Foreign Investment Division (III), Mumbai – 400 001