Introduction: An Overview of NRI Investments in Indian Real Estate
The Indian real estate market has been growing steadily in recent years and is now one of the most lucrative investment opportunities in the world. The market appears to be robust despite the pandemic outbreak, currency depreciation, and growing global inflation.
NRI (Non-Resident Indian) investments have played an important role in this growth, allowing NRIs to take advantage of the great potential for returns on their investments in Indian real estate.
The government’s implementation of the RERA Act (Real estate regulatory authority) has enhanced NRIs’ faith in real estate transactions, as it promotes greater transparency in the process. One can also attribute industry growth to the effective implementation of internet-driven technologies that enable highly interactive virtual tours and digital inspections of layouts.
Additionally, attractive incentives for non-resident Indian investment included in the 2022-2023 budget has also pushed the growth further. For instance, there had been a significant reduction in the surcharge on capital gains from 37% to 15%.
In this blog, we will be taking an overview of NRI investments in Indian real estate, including the benefits of investing in Indian real estate and what are the factors that are attracting NRIs from all over the world to invest in Indian real estate.
Why NRIs are Investing in Indian Real Estate
The Indian real estate market has always been a popular investment destination for Non-Residential Indians (NRIs). Over the years, the country has seen a steady inflow of investments from NRIs, who are interested in investing their money in properties back in their home country. There are several reasons why they are investing in Indian real estate. Some of the key factors include
Strong Economic Growth: India’s economy has been growing steadily over the years and is expected to continue to do so, making the country an attractive market for real estate investment.
RERA: The Real Estate (Regulation and Development) Act, or RERA, is a significant law in India that aims to regulate and promote transparency in the real estate sector. Since 2015, there has been a significant transition in the Indian real estate market as it started moving closer to being a customer-focused market. Market transparency, credibility, and profitability have all increased because of policy measures like RERA.
Appreciation of Property Value: Real estate in India has shown strong growth and appreciation over the years, making it an attractive investment option for NRIs.
Rental Income: NRIs can earn rental income from their properties in India if they choose to rent them out, providing them with a steady stream of passive income.
Emotional Connect: Many NRIs, have an emotional connection to their home country, and investing in real estate provides them with a sense of ownership and connection to their roots.
Tax Benefits: NRIs may be eligible for certain tax benefits on their real estate investments in India, including the provisions of the Double Taxation Avoidance Agreement (DTAA) between India and their country of residence. Here is a list of countries with a Double Taxation Treaty with India.
How real estate in India is growing to attract NRI investments?
The Indian real estate market has been growing steadily in recent years and offers great potential for returns on investment. This growth is driven by various factors, including the country’s strong economic growth, increasing urbanization, and a growing middle class.
The Indian government has also taken steps to ease regulations for NRI (Non-Resident Indian) investors, making it easier for them to invest in Indian real estate.
Another factor contributing to the growth of the Indian real estate market is the growing demand for housing, both for personal and commercial use. The demand for office spaces, shopping centres, and other commercial properties is also increasing as the Indian economy continues to grow. This is creating opportunities for NRI investors to invest in commercial properties and reap the benefits of the potential long-term capital appreciation and rental income.
Additionally, the Indian government has launched several initiatives, such as the “Smart Cities Mission,” aimed at boosting the growth of the real estate sector in smaller cities. These initiatives are expected to drive demand for housing and commercial properties, further contributing to the growth of the Indian real estate market.
Demand of Luxury Housing in India
NRIs are investing in the luxury home market today because it fits their lifestyle, offers them a safe haven, and produces better appreciation rates and longer-term rents. The luxury real estate market in India is characterized by high-end, premium homes with top-of-the-line amenities, spacious interiors, and beautiful views.
Luxury homes which are located in prime locations such as Mumbai, Goa, Delhi, Bangalore, and Pune are becoming more and more popular. The demand for luxury homes is driven by factors such as urbanization, changing quality of life, easy access to information and the increasing purchasing power of the Indian middle class.
Luxury real estate sector is gaining momentum and is anticipated to grow further in 2024. Non-resident Indians have favoured luxury properties, and during the pandemic, second homes have become increasingly popular among them. NRIs seek to reside in a self-contained community that provides easy access to all amenities.
Developers in India are responding to the growing demand for luxury homes by launching new projects in prime locations and offering a range of amenities and services to attract buyers. The government is also taking steps to promote the growth of the luxury real estate market by introducing tax benefits and other incentives for home buyers and investors.
Conclusion:
Investing in Indian real estate is a great opportunity for Non-Residential Indians (NRIs); it helps them take advantage of the growth potential of the Indian economy and diversify their investment portfolio.
With benefits such as long-term capital appreciation, rental income, tax benefits, and an emotional connection to their roots, NRIs are increasingly looking at Indian real estate as a lucrative investment. It is important for NRIs to be aware of the taxation framework, regulations, and restrictions when investing in Indian real estate.
