For most Non-Resident Indians (NRIs), regardless of the part of the globe they reside in, choosing the right investment option for their hard earned money is often a challenging task. However the past few years have seen the emergence of Real estate in India as their hot favorite. An increasing number of NRIs choose to buy houses in their motherland, in one of the major metros. NRIs look up at Apartments in Chennai and other thriving cities of India are considered as their home after retirement and also as a safe investment for their future. A recent industry analysis suggests that NRI real estate investments in India could reach $14.9 billion in FY22. (Source – Economictimes)
There are many reasons behind this growing trend, the reliability of the investment, the good asset appreciation and a feeling of security of owning a property in homeland are few of them, let us look at these in detail
Increasing Purchase Value
As Rupee value depreciates against other currencies the buying potential of NRIs increases. With rupee value plunging to new lows, real estate investment in India becomes much approachable and yields them great savings. For example, an apartment in Chennai worth Rs 82 lakh would cost NRIs approximately 1 lakh dollars at present and for an NRI in the United States with over a few years of service there, this is feasible and easy on the pocket.
Safer Investment & Better Returns
Investments in sectors like Stock market, Gold and commodity market are volatile, involve risks and are influenced by are multiple factors like global political scenario, changing Governments, the threat of wars, the exploding oil prices, and many more such factors. It has been observed in the mid-October period in 2022 that the NSE market index had shrunk by about 6% y-o-y. On the other hand, banks offer very less interest rates for the Fixed deposits. However, in contrary to these, real estate investments in India, especially in the major metros, like the flats for sale in Chennai have experienced appreciation YOY and prove to be a very reliable and rewarding investment.
Also for NRIs looking for investment Portfolio Diversification, real estate investments in India is the safest and a very rewarding option.
Easy Legal Formalities
Purchase of property in India as a NRI is pretty much a hassle free process and requires some basic documents and formalities. The following basic documents are required for the process
- Passport and/or OCI card
NRIs have to furnish their Indian passport and in cases where they hold a foreign passport they have to provide their PIO (Persons of Indian Origin) card or an OCI (Overseas Citizen of India) card.
- PAN Card
This is required for the financial transactions in the process.
- Power of attorney
In case the buyer is not available in the country to carry out the legal formalities during the process they must ensure to furnish a notarised Power of Authority (PoA) document notarised for hassle-free process. This is also necessary to acquire home loan for NRIs.
The payment for the property purchase can be done through inward remittances or through NRA (Non-Resident Account), in compliance with the FEMA (Foreign Exchange Management Act) regulations. NRIs can easily invest in the Indian real estate market with the help of a set paperwork checklist.
Easy Home Loans
NRIs can get home loans for purchasing property through NRE(Non-Resident External) or NRO (Non-Resident Ordinary) accounts, and can repay their EMIs in INR, which again is advantages to them considering the falling value of money. The NRE account enables them to transfer their foreign income to India, the interest earned on it is tax-free. Through their NRO Account they can manage theirIndian income sources and also transfer foreign currencies to finance their property. The financial institutions sanction the loan in Indian currency, and the buyer must repay it in INR as well, a favourable scenario for NRIs.
NRIs enjoy tax benefits on the property investments under various sections like Sections 80C and 80TTA of the Income Tax Act. Similar to the residential Indian they can avail income deductions of INR 150,000 per annum on the principal amount and INR 200,000 per annum on the interest repayment component. They are also eligible for an indexation benefit for their properties in India. For example, properties held for more than 24 months period are considered as long-term capital asset and are qualify for an indexation benefit with simplified taxation at 20%.
Feeling of security and accomplishment
Beyond all the materialistic advantages, the very feeling of possessing a own house in the native land always gives a sense of security, pride and a feeling of accomplishment. There is always a place to come home to after retirement and discover the long forgotten roots, this solace is a big comforting factor for a Non-Resident Indian (NRI).
If you are an NRI looking for a smart investment option that is safe, easy to maintain and also yields you good returns, do check out the apartments in Chennai and other thriving cities of India and make the right choice for yourself. As you work chasing your dreams in a foreign country, let your money work for you back home.