An estimated 30 million NRIs, living in 130 countries, are sending remittances back home regularly. According to the World Bank, India continues to retain the top slot in remittances by expatriates from abroad. India will beat China in receiving the highest amount of remittances for five consecutive years.
For 2011, NRI remittances are likely to touch 4 58 billion against China’s 4 57 billion. In 2010, India received 4 54 billion in foreign exchange remittances , three percent of India’s GDP, beating China’s 4 53 billion.
The rupee depreciation and West Asian currencies linked to dollar which is appreciating against the rupee are major driving forces that resulted in a surge in remittances to India. The remittances are mainly used for family needs and investments in stocks, property and term deposits. Real estate here is preferred because of a desire to create a higher lifestyle for the family and the price appreciation in the long term.
Though there was an interim sluggishness in NRI investments, industry experts feel the trend is going to pick up in the coming months due to the uncertainty prevailing in the global economy and the attractive investment opportunities offered here. There are opportunities opening up for developers in new markets such as Mauritius. This is ample proof of the surge in NRI investments in real estate.
Property shows are held regularly now in various countries such as US, UK, and West Asia due to the concentration of a large number of expatriates in particular areas. The organisers focus on the many options available in various localities here.
Since liberalisation in the 1990s, investment norms have been simplified to enable NRIs and persons of Indian origin (PIO) to invest in real estate here. Realtors here have also set shop in some countries to interact directly with overseas Indians and extend effective after sales services. Moreover, housing finance companies and banks with their representative offices in various countries offer home loans to NRI investors.
An Indian citizen who resides outside India is permitted to acquire property in India other than agricultural, plantation property and farmhouse. NRIs get almost all the privileges that residents have while investing in real estate.
They can acquire, inherit, transfer and gift residential or commercial property. The purchase can be made through funds remitted to India through normal banking channels or funds held in certain types of accounts maintained in India. They can get home loans, mortgage loans and loans against future rental income.
While sale proceeds up to two residential properties can be repatriated after a lock-in period of three years, there is no restrictions on commercial property. Up to one million dollars per year from such a sale can be remitted outside India from a non-resident ordinary account. Rental income can be repatriated after payment of tax, wherever applicable.
A number of property management companies including MNCs have set up shop in major cities to extend property management services. This is a boon to NRIs and PIOs investing in India while living in other countries.
NRIs, while returning, can retain their foreign current assets acquired, held or owned while abroad, or inherited from a person who was a resident outside India even after return to India for permanent settlement. However, income earned from an overseas asset needs to be repatriated to India and credited to a resident foreign currency (RFC) account.
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