What attracts NRI investment in Indian real estate
Jan 10, 2014
Source : The Times of India


MUMBAI: For Non Resident Indians, a base in their homeland is always considered a safe prospect and gives them an added sense of security. When it comes to the Indian real estate, non-resident Indians (NRIs) take centre-stage, especially with the depreciating rupee. The recent market trend where there is high inflation, volatility and the rupee value depreciating, NRIs make the most of the opportunity and invest in the Indian real estate market.

At the same time, NRIs are also attracted to the higher interest rates on NRE (Non-Resident External) and FCNR (Foreign Currency Non-Resident) deposits, as the stand-alone rupee returns look lucrative to them.

NRIs investing in real estate have to call for a reasonable share of due diligence. One has to make sure of the developer credentials, potential for infrastructure development in the area, access to public transport and quality of property management in the projects. It has been observed that NRIs have been investing in both, residential and commercial spaces.

The real estate industry in India has a lot of potential with various foreign Real Estate and finance companies having entered the Indian market. Moreover, approval of 100 per cent FDI in real estate development is also an incentive for the NRIs. The Indian government has played a major role in supporting the growth of the real estate sector by allowing NRI investment in the real estate. The Government has opened the doors for the FDI in Housing and Real Estate Sector for development of serviced plots, construction of built-up residential and commercial premises including business centers and offices, development of townships, city and regional level urban infrastructure facilities, including both roads and bridges, investment in manufacture of building materials, and investment in participatory ventures in the development of serviced plots and construction of built-up residential premises.

Financial institutions such as banks provide home loans easily and efficiently to NRI’s as repayments are done timely thus, helping banks with low NPAs and low debt ratio. Furthermore, if someone is already getting income in India from sources like rent or dividend, then people can directly repay the loan.

Growing economy with a rising number of residential housing, IT, ITeS, organised retail and hospitality industries, the sector will continue to see increased investment activity. The Indian real estate industry is likely to grow from US$ 12 billion in 2005 to US$ 90 billion by 2015.  Foreign direct investment is also expected to jump six-fold to US$ 30 billion over the next 10 years. Thus, it makes India a haven for NRI investments.

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