In this Q&A column, we bring you inputs from an award winning developer on all matters pertaining to the purchase, sale and rental of properties in India by NRIs, the extant laws that govern this, and numerous other related matters. Readers of NRI Achievers are to send in their queries, which will be answered by our panel of top honchos in the domain of real estate development.
What are preferred locations/regions for NRI investment planning ?
Historically, Mumbai and Bangalore were the preferred locations for NRIs but of late there has been a catchment towards Delhi NCR. It’s not a hidden fact that Mumbai Real estate has remained almost stagnant for few years and soaring prices of property also makes it difficult for investors with small and medium resources. Meanwhile, Bangalore finds an overgrowing burden on its existing infrastructure marred by lack of planning. This makes Delhi NCR as the most preferred location as connectivity, supporting infrastructure and development under planning make it an at tractive proposition both from the investment as well as habitat point of view.
Why is this the right time for NRIs to invest in Real estate in India ?
There are a few factors that influence the decision making process of investors in any investment instrument. Firstly, RBI norms allow NRIs or any person of Indian origin to invest in residential and commercial properties without any approval of authorities through bank channels and the FEMA (Foreign Exchange Management Act), paid in the Indian currency. Secondly, rupee is expected to improve over the next few years and the economy is slated for a GDP growth triggered by a number of foreign investments from countries like-Japan, China and Australia. With the upcoming REITS and other checks and balances coming into place, there should be no no concern about losing money due to fraudulent methods.
Which would fetch a better return for the NRIs – Investment in Residential or Commercial properties ?
Though both residential and commercial properties present a good investment opportunity, our advice will be that they invest more in commercial properties. Most good commercial properties come with an assured bank return and leasing assistance, some even offer guaranteed lease. In this situation, not only does the value of the asset get enhanced, but you also get fixed returns on it. This protects your investment portfolio from the volatility of stock market and inflationary elements. The longevity of leases associated with commercial properties saves you from the pain of frequent changes in leasing. The sense of pride and a portfolio diversification are other implied benefits for an NRI investor.
What other factors need to be considered by NRIs before making an investment ?
NRIs must do due-diligence, check developer credentials, supporting in frastructure, master plan of the area and quality of property management in the project. For any investment in commercial property, investors must consider additional factors like the
presence of recreation and entertainment, frontage, foot-fall, location accessibility and the adjoining population.