NRIs Investing in Residential Projects

May 5, 2009	(Be the first to rate this story!)  Loading ...
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Last year, after RBI spelt out clear norms for NRIs to invest in property, and with NRIs holding Indian passport no longer requiring prior permission before investing, there was a spurt in NRI investment in Indian realty. According to Omaxe’s Rohtas Goel, “The policies set out by the government regarding property investment and repatriation, has made investments in India more favourable. NRIs can acquire residential/ immovable property in India, rent it out, transfer or sell it, if required. However, the regulations do not permit the NRIs and PIOs to acquire property like agricultural land, plantations and farmhouses. Moreover, GOI is allowing 100% repatriation, so NRI’s can now also take out the rental income and capital investment in the property outside India, subject to the foreign exchange regulations.” One noticed that NRIs, including young professionals, technology workers and domain-specific consultants invested in property back home, both in the semi-premium and premium categories.

One, they wanted to have a house of their own in their home country if they decided to return and the house covered both investment as well security factors, and two, this could be used as their holiday home, which stayed fully furnished and was used for a few weeks annually. However, with the market downturn, the scenario changed completely. Even though there has been increasing remittance, to the tune of $30 billion now, and it topped list of countries in the world in 2007 (according to World Bank study) where expatriates remitted money to their home country, real estate has received a small pie of the total investment. According to NRI Prashant Tandon, who is wary of parking his funds in real estate, “Indian real estate was overvalued all along, and now it is closer to realistic levels. I do not think I want to put money on a riskyasset class. I would much rather put it in some safer instruments, eg fixed deposits, bonds or blue-chip companies.” However, developers say NRIs are investing more in residential projects, compared to retail or office real estate, after the recent home loan interest rate cuts and price cut by developers.

News Published Under:   Non Resident Indian (NRI) |

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