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The Ultimate Guide for NRI Investors Planning to Buy Real Estate

By Lodha

From taking that first nerve-wracking flight to make your home in a foreign country to now travelling back and forth to visit family in India, the life of an NRI is dynamic and global. However, whether you have to visit India for personal or commercial reasons, having a home base in the country helps. You can make trips to India knowing you have a home where you can stay indefinitely. Or you can run business operations from an office space to contribute to the nation’s economy. Buying property in India, for instance, flats for sale in Mumbai is also an excellent way for you, as an NRI investor to not only stay connected to your roots but also diversify your investment portfolio. To help you make an informed decision about real estate investments, here is a handy guide on buying property for NRIs.

Can NRIs Buy Property in India?

As per the Foreign Exchange Management Regulation of 2018, NRIs can buy property in India. The Indian government places little to no restriction on the kind and quantity of property an NRI can buy in the country. As an NRI, if you want to invest in the real estate of your home country, you can acquire a diverse range of commercial and residential properties. The only caveat when it comes to NRI investment in real estate is properties like agricultural land, plantations and farmhouses. Otherwise, you can invest in as many properties as you like provided you can arrange for sufficient capital and deposit it in the requisite NRI account.

Why Invest in Indian Real Estate?

India's real estate market offers lucrative opportunities for NRIs. Here are some key reasons why investing in Indian real estate is a wise choice:

• High ROI Potential: Indian real estate has consistently shown robust returns on investment, particularly in major cities like flats for sale in Bangalore as well as upcoming urban areas.
• Diversification: Real estate investment provides diversification to an investment portfolio, balancing risks associated with other asset classes.
• Emotional Connect: For many NRIs, investing in the Indian Real estate sector in their home country provides a sense of connection and security.
• Favourable Exchange Rates: Investing when the currency exchange rates are favourable can result in substantial savings and higher returns.

5 Key Considerations for NRI Investors

Understanding Legal Regulations

Buying property in India as a foreigner, you must be aware of the legal framework governing property investments in India. Key points include the Foreign Exchange Management Act (FEMA), which governs NRI property transactions; understanding its provisions ensures compliance and smooth transactions. It's crucial to ensure the property title is clear and legally verified to avoid disputes.

Financial Planning and Budgeting

Effective financial planning is essential when investing in real estate. Start by establishing your budget, considering the property cost, registration fees, taxes and maintenance charges. Non-resident Indians (NRIs) can also take advantage of home loans from Indian banks, making it important to compare interest rates and eligibility criteria to secure the best deal. Additionally, be mindful of tax implications in both India and your country of residence. Double Taxation Avoidance Agreements (DTAA) can help reduce tax liabilities, ensuring a more efficient financial strategy.

Choosing the Right Location

Location is a critical factor for NRI investment in real estate. When selecting a property location, consider major cities like flats for sale in Pune, Mumbai, Bangalore, Pune, Hyderabad and Delhi-NCR due to their high demand and superior infrastructure. Look out for the growth potential of areas with upcoming infrastructure projects, good connectivity and future development prospects. If rental income is a priority, opt for locations with high rental demand and favourable rental yields.

Managing the Property

Effective property management is crucial for preserving the value of an NRI investment in Indian real estate. To ensure smooth operations, engage professional property management services for maintenance, tenant management and rent collection. Schedule periodic visits to inspect the property and promptly address any issues or have reliable local contacts, such as friends or family, to provide valuable on-ground assistance.

Opting for a Reputed Developer

When investing in real estate, selecting a top builder in India is essential for ensuring quality and timely delivery. Begin by researching the developer's credentials, including their track record, past projects and customer reviews to gauge their reliability. Verify that the project has all necessary approvals and is registered with the Real Estate Regulatory Authority (RERA), which ensures that the developer adheres to legal and regulatory standards. Additionally, evaluate the project's amenities, and specifications to ensure that they meet your needs and expectations.

For example, Lodha, India’s No. 1 real estate developer, is known for its commitment to excellence, having delivered numerous high-quality residential and commercial projects nationwide. Notable among their developments are the Lodha World Towers and The Park, which host an international community of residents. These luxurious developments are not only designed with world-class amenities and architecture but also offer the potential for higher rental yields, making them an attractive investment opportunity. With their strategic locations and premium facilities, Lodha's projects continue to set benchmarks in the real estate industry, attracting discerning buyers and investors from around the globe.

Checklist of Documents Required for NRIs To Buy Property in India

NRI property purchase in India is no different from any other real estate transaction and requires you to submit certain documents. While the exact list of documents required may differ based on the particulars of your transaction, in general, you will have to provide the following documents:

• A copy of your Indian passport and visa
• A work permit from your country of residence
• Most recent ITR
• Pay slips from the last six months
• Property-related documents, including the title deed.

If, as an NRI, you cannot be present for the property transaction in person, you can appoint a Power of Attorney (POA). Usually, it is best to choose a trusted individual, like a relative or friend, as a POA to act on your behalf during the transaction. Additionally, you will also have to open and maintain bank accounts designed specifically for NRIs, such as an NRE (Non-Resident External) and NRO (Non-Resident Ordinary) Account. While the former allows you to transfer your foreign earnings into India with tax-free interest, the latter helps manage the funds you earn in India. An NRO account also accepts deposits in foreign currency and can be instrumental in helping you purchase property in India.

NRI property purchase in India can be a rewarding venture with the right approach and guidance. You can make informed investment decisions by understanding the legal framework, planning your finances, choosing the right location, and partnering with reputable developers. Remember, thorough research and due diligence are key to successful real estate investment. With this ultimate guide, NRIs can confidently navigate the Indian real estate market and build a valuable asset for the future