NRI Investment in India is not a small market, to begin with. Most Indians settled in countries outside of the nation tend to make investments in India, at times just as an emotional move and most other times, just as a backup/ security investment like that done in real estate. If you are an NRI hoping to make a viable investment in India, specifically in real estate, it is natural for you to have multiple questions in mind; and for the good news: we are here to answer it all!
NRI investment in real estate is considered to be one of the safest and most sensible investments. Real estate investment not only opens a passive source of income by simply renting it out but also because it means that you will always have a place to call home, in case you choose to return at any point in time. However, what also comes along with investment in real estate in India is a lot of potential risks. These risks, however again, can be easily avoided by just some scrutiny and diligence by the buyer.
If you are an NRI looking to invest in real estate in India, here's a quick checklist that may be of help-
1. Physical Assessment Of The Location
Multiple builders and property dealers have recently started taking trips abroad in the pursuit of hosting an “NRI roadshow” where they present fancy brochures of property deals in India. It is advised to all NRI’s, however, to make sure that they physically assess the property. If you cannot afford to travel to India, try and have some of your local friends or relatives do it on your behalf. The bottom line, however, never to invest in a property without having inspected the ground reality.
2. Pricing Verification
Another important aspect that needs to be on the checklist of every NRI investing in India is pricing. As NRI’s, it is natural for you to appear as an easy check to Indian builders and hence, you’d be more vulnerable to higher-than-market pricing by builders. You may also be kept from getting additional benefits and perks that Indians otherwise would, just because of being an NRI. Hence, always make sure to have the property rate verified by a citizen residing in India to avoid paying a higher amount.
It is also recommended to never pay a big amount of money upfront and to always look for properties that offer a construction-linked payment plan.
3. Loan > Cash
As an NRI investing in property in India, the next thing to keep in mind is to take a bank loan instead of paying upfront cash (even if you have it) for your preferred property. Taking a loan from an Indian bank will render further assurance and security that the property in question is viable and not a poor investment. This is because banks always conduct a check on the property to assess multiple factors like whether the builder owns the land, if all land licenses are valid, if the property actually is worth the loan amount, the general legitimacy of the property etc.
4. Market Research
Just like it is important to conduct in-depth research on the property you want to invest in, it is equally important to conduct research on the market itself. You may find yourself interested in a particular property investment proposal exhibited by a builder in an NRI roadshow. However, it must be understood that there are multiple new properties and builders coming up with projects every day in India. Do not just go with the first option you see. Instead, explore for yourself to make sure you invest in the best option of the lot.
5. Legal Reviewal
As an NRI investing in India, another critical factor to keep in mind is to always learn about the Indian laws governing NRI transactions before initiating the deal. There are multiple restrictions imposed by the Indian government on the purchase of properties. For example, as an NRI, you are subjected to restrictions on how quickly the profit from a real estate transaction can be repatriated. Hence, make sure to conduct a legal reviewal to make sure you will be gaining from your investment. In order to be super-sure, it is also recommended to perhaps hire a legal counselor to do the job for you.
Final Thoughts: Real Estate ROI Expectations For NRIs Investment In India
The biggest concern for any investor, be it for a citizen investing in a local brand/ business/ fund or an NRI investment in India, is the ROI. Now speaking purely in terms of returns from real estate, it must be noted that experts suggest the return to be lower than they have been in the recent past. This is majorly due to the skug in the economy owing to the 2019 pandemic. It is also why a dip in residential real estate development has been noticed in the last 1.5 years and hence if you are indeed planning to invest, make sure you do it the right way and set reasonable return expectations.
We at PropertyGeek, up-to-date and passionate real estate geeks are always here to walk the journey with you!