In recent times, the Indian rupee has weakened like never before, reaching an all-time low of Rs. 74.33 for 1 USD. While this may not be good news for the nation’s economy, it sure brings a sigh of relief to the non-resident Indians (NRIs) who are looking forward to buying property in India. After all, the fall in the rate implies that they can now have more value for their money, and can buy better properties without investing more. Such a win-win is only rare, especially if one is dealing in the ever-dynamic and astoundingly expensive real estate market.
That being said, there is much more to look at while investing in property, beyond the falling rupee. Let us take a quick look at each of the factors that play a significant role in this aspect.
Purchasing one bedroom hall kitchen apartment in a city like Seattle (USA) can prove to be as expensive as 400,000 dollars and even more, while than in London (UK) can go close to 300,000 dollars. However, buying the same apartment in India would need an investment of meagre 60,000 dollars. This low ticket size is what makes the Indian real estate market a truly remarkable proposition for foreign investors.
Any investment on the face of the earth is only worth if it promises excellent returns. While real estate prices are often fluctuating and the changes are usually subject to the location and the demand of the property, it wouldn’t be wrong to say that the reasonably located properties in India enjoy a 5% to 10% appreciation annually, and in some cases even more. However, this is an average rate, and an investor must keep at least an 8-10 year horizon before they wish to resell the property to gain the desired profit. Good returns cannot be expected in a short time span of 2-4 years. The math is easy. The longer one can wait, the better is the appreciation they can enjoy.
The reason behind this incredible appreciation in rates is simple. There are much more builders, traders and investors in the real estate market than there are good properties. This results in a supply-demand deficit, leading to a quick and lasting increase in the value of a property.
If an NRI needs to purchase a residential property, they can easily get a Home Loan to pay for the same. In order to procure the loan, they will need to offer the relevant documents stating:
Some banks may also need additional documents depending on their own policy. Of course, citizens coming from different countries will need to meet different criteria for Eligibility for Home Loan for NRI. That being said, Indian passport holders, who are citizens of some singled out countries may not be eligible for a Home Loan in India.
NRIs residing in neighbouring countries such as Pakistan, Afghanistan, Bangladesh, Sri Lanka, China, Bhutan, Nepal, and even Iran, need a prior authorisation before purchasing property in India.
However, NRIs residing in other parts of the world, need nothing else but a valid Indian passport when it comes to investing in Indian real estate.
While an NRI is free to buy either commercial or residential property, they are not allowed to invest in farmhouses, plantation properties, and agricultural land. The only way for an NRI to acquire such property is by way of gifting or inheritance.
If an NRI claims to gain property through inheritance, they are liable to submit documentary evidence of the same. In addition, they are required to furnish a certificate in the specified format, from a chartered accountant.
If a property is being purchased, the payment needs to be done in the Indian Currency, i.e., INR. The payment must be made through one of the many banking channels and must be generated through an existing NRI account.
Indian real estate industry is not as well organised as its counterparts in the developed nations. This leads to a lack of transparency in the stem, which could put the NRI investors at risk of being charged more than they should be for any given property. This issue, however, has been tackled to a great extent, thanks to the advent of online lenders, who readily avail the past data. This data can help and understand the investor as to the average price for a real-estate property in a given city and a given location. That being said, it is the onus of the investor to make on-ground checks before signing the sale deed and raise an objection right away.
While this may be a difficult nut to crack, the implementation of The Real Estate (Regulation and Development) Act, 2016 by Real Estate Regulatory Authority (RERA) in a vast majority of states across India have helped address issues such as date of completion, project features. This has eased the process of buying real estate by NRIs while also making it more transparent. That said, it is advisable for the NRI investors to hire the services of a lawyer who can undertake all the legal proceedings on their behalf. This will help them investors in enjoying the perks of purchasing the property, without getting their hands dirty in the process.
We hope that as an NRI, you now know which aspects to consider when you set out to buy real estate in India. For any assistance or query regarding Home Loans for NRIs, you may speak to our experienced Mortgage Specialists.
Also Read: What are the Home Loan Options For an NRI?
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