India, one of the fastest-developing countries, has one of the strongest real estate industries in the world. Even during global recessions, it is one of the few markets that showed no sign of slowing down. It is no wonder, then, that the Non-Resident Indians (NRIs) prefer investing their stronger foreign currency savings into the booming Indian real estate industry. The benefits of investing in Indian real estate is not limited to just NRIs. There is another category of people who can invest in real estate in India; these are the PIOs (Persons of Indian Origin) / OCIs (Overseas Citizens of India).
Though investing in real estate, especially in a country that is not your primary residence, can seem quite challenging, in reality it is quite straightforward. There are just a few basic rules to keep in mind, and you will be a proud home-owner.
1. Choosing the Right Location:
According to the experts, along with the MMR, Bangalore and Pune are also great cities to buy a home in. “In the present scenario, in my opinion, MMR, Bangalore and Pune, respectively, are among the ideal destinations for residential investments, provided they keep a long-term horizon (5-10 years)” states Anuj Puri, Chairman at ANAROCK Property Consultants.
The sprawling city of Pune has been ranked as the most liveable city in India several times. “Recently, there has been an upsurge in demand for real estate developments in Pune due to the rise of educational institutions and commercial hubs in the city. With the tremendous growth in the commercial and retail market and advancement in social infrastructure, Pune serves as an ideal choice to invest in one’s dream home. In 2020, Pune recorded higher-than-average Quarter On Quarter (QOQ) growth in sales. The city is witnessing an increase in new upscale residential properties that have been designed to elevate the living experience for home buyers. Pune remains a preferred city and is a competitor to Mumbai in terms of real estate,” says Milind Korde, Managing Director of Ananta Landwise.
2. Picking the Right Time to Invest
An all-important question arises—is now a good time to invest in a home? “Amidst the prevailing uncertainties, stock market volatility and recent-past financial sector incidents, residential real estate investment is currently one of the safest bets, especially from a long-term perspective. While stock market prices are at their peak, property prices are at their lowest best with developers doling out multiple offers and discounts, resulting in actual price reductions on the overall cost of acquisition. Affordability of homes in top cities is also at its best. It is estimated to be 27% in FY21 as against 53% in FY12. Moreover, while housing prices have been range-bound for the past 7-8 years, the pickup in demand will soon cause prices to harden once COVID-19 stabilises. Also, there are lots of options available across budget segments for investors to choose from,” adds Anuj Puri.
3. Choosing the Right Builder
A big investment decision like real estate, especially not in the city of your residence, needs to be thought through thoroughly. One of the biggest considerations will be choosing the right property developer. NRIs should do a mandatory backcheck of the builder by whatever tools available. It is important to connect with the representatives of the developer, and get all your doubts and questions answered. Your best bet will be to go with a trusted, well-reputed developer.
4. Documents Required
Be thorough with your research. Get a list of which documents will be required, the plan of action of the home-buying process, and the financial aspect of the process. Documents required include copies of passport, work permit, valid visa, salary certificate, permanent account number (PAN card), etc. There is a need for a local contact address as well as power of attorney to a reliable person, preferably your chartered accountant.
5. Plan The Finances
Banks allow 80-85% of loan amount against the property value and allow shorter payback periods of 5-15 years to NRIs as compared to about 30 years to resident Indians; this is because they are expected to have higher repayment potentials than resident Indians. But when it comes to loan interest rates, NRIs can avail of the same rates as the resident Indians. And in the case of loan default, do remember that the loan is taken against the said property itself, thus making it the bank’s property upon non-repayment of the loan.
The tax rules applicable for NRIs are pretty straight forward too, with no tax being applicable for holding properties in India. However, if rent is being sourced from these properties, then it will be taxable.
6. Property Management
Once you’ve invested in your home, property management becomes crucial. And it’s always wise to have a reliable person on the ground to consider the property’s well-being against fraudulent builders, tenants or encroachments. That is why, Krisala Developers offers special Property Management services to their NRI clientele, because we want you to rest assured that your home is in safe hands.
(Quotes & Research Articles Sourced from “Architectural Digest”)