Indian Real Estate- NRI Investors Ultimate Route to Becoming Wealthy
Indian real estate has always been the most preferred investment option among the NRIs since times unknown. But the uncertainty in recent times has immensely spurred up the demand from the NRIs. Even though Real Estate was not completely resistant to the market volatility during the pandemic, it took some time to respond to the situations, unlike the other financial markets which were impacted drastically. Also, the rate at which the sector is bouncing back to normal proves its capability for a prospective future to its stakeholders.
Let’s take a deeper look at why NRIs prefer investing in India to become wealthy and analyze the benefits real estate has to offer to its stakeholders.
Reasons why NRIs invest in India
Indian is always a part of most NRI’s retirement plans, as most of them plan to settle back in their homeland after their retirement. Apart from the emotional attachment towards the homeland, multiple factors make the NRIs come back to India for investing. Let’s look at a few major factors that majorly contribute to NRIs investing in India.
● Robust Economy– India has one of the strongest economies in the world. The markets of the nation have exhibited extraordinary resilience and growth quotient even during tough times like the pandemic, when most of the countries were entering a recession. Even the growth of the GDP during 2020 was not up to the mark, it wasn’t negative like most of the economies of the world. This proves the robust economy, eminent markets, and capabilities of the businesses which benefit the investors with reduced risk. NRIs understanding the prominence and the strength of the Indian economy are attracted to the investment opportunities in India
● Weakening rupee value– The economic conditions lately have caused the further weakening of the rupee value. Apart from the impact of the current situations, USD, EU currencies grow at a much faster pace comparatively and are always of greater value. This is one of the main reasons NRIs invest in India, to invest less and reap more. When an NRI invests a certain amount at a certain value of rupee if the rupee value falls, with the same amount the NRI will be able to invest and make more profits. The falling value of the rupee thus is favorable to the NRIs for investing in India.
● Stable returns– The potential markets of India offer promising returns to the investors. The resilience of the Indian markets even during times of volatility globally, is one of the main reasons which spurred up the demand from NRI’s during the pandemic. The capability of the financial markets to perform even during adverse situations is what makes the NRIs look forward to India for investing their hard-earned money.
● Government initiatives– FDI’s are one of the major contributors to the Indian economy and the government actively takes up new initiates to encourage them. The government in recent years has taken up several initiatives which directly and indirectly have positively impacted the investments from the NRIs. RERA(Real Estate regulations authority), Benami, Demonetization, GST are a few to mention. Along with this, the liberalization of FEMA has bought in transparency and structure, and streamlined the investment process.
● Tax benefits– Along with multiple initiatives and measures from the government, the tax benefits and exemptions are the icings on the cake. The Double taxation avoidance treaty signed by the government with multiple governments is another boon to the NRI investors. The interest earned through the NRE and FCNR is exempt from taxation. Capital gains, certain government-issued bonds, and dividends from Indian companies are also exempt from tax, which help the NRI investors to save additional bucks from their investments.
NRI investments in Real Estate
Investment in Indian real estate takes major weightage in both the NRIs and residents due to the obvious reasons of capital appreciation, high returns, and stable passive income. Apart from these reasons the emotional and familial responsibilities also contribute to NRIs Investing in India.
The pandemic also tremendously impacted the NRIs to invest in Real Estate due to the following reasons:
● The influx of NRIs to India in a huge number
● NRI’s rediscovering the importance of having a place/home of their own
● Understanding the need for a proper residential place with all basic requirements and additional amenities to support work from home
● Discovering the need of having steady passive income
● Planning for retirement securely way ahead, keeping in mind the uncertainties
The NRI investments in the Indian realty market have increased over the years at a good pace and now have been predicted to grow at a higher speed due to the above reasons. Especially the luxury and high-end properties are majorly in demand from the NRI’s. A property search portal 50% increased queries from the NRI’s for luxury housing during the pandemic. A report by a leading player in the NRI space predicted a rise in NRI investments to $13.1 billion in FY 21 from $6 billion in FY 14. The uncertainties have only positively impacted the Real Estate investments from NRIs as the importance of owning a home has become a dire necessity.
Benefits for NRIs Investing in Indian Realty
Real Estate is beneficial to investors for several reasons. The fact that the sector has investment options suitable for every investor’s risk preference makes it one of the most reliable options for investors. Here’s a list of benefits that real estate has to offer its stakeholders
● Capital appreciation– Real Estate as an asset is an unbeatable option because of its appreciating value. The longer one holds the asset the more the value of the asset appreciates. This not only makes the asset inflation resistant but also provides a good amount of profits for the investor.
● Rental Income- The passive income from the real estate in the form of rental income is also one of the main reasons why most NRIs prefer real estate. Most NRIs invest in residential properties, give them to tenants until they settle back in India, and earn rental income every month. The yields from the rental income become solid funds in the long run and can be helpful for retirement also.
● Retirement Plan- Real estate investments for the long term are one of the safest and most profitable investments. Capital appreciation and the regular returns along with tax benefits on long-term capital gains make real estate very appealing to NRI investors. Especially the long-term opportunities for investment in real estate have the added benefits from the government making the real estate a highly beneficial option for the NRIs.
● Ample Investment Options- Real Estate has a wide range of assets for its potential investors, right from safe and secure rental properties to institutional-grade assets NRIs have an option to invest in any asset according to their risk tolerance and budget preference. The flexible investment options are also an added advantage for the NRI investors.
● Ease of Investment- The government of India has streamlined the investments in real estate to encourage NRI investors. The flexibility to do the transactions securely with the help of POA(power of attorney) also boosted the NRI to invest in India. Multiple account options like NRO, NRE, etc which help the NRI to remit the money without any hassle, are also very beneficial to the investors
The potential of the Indian Real Estate and the robust economy of the country lure the NRIs to invest in India. Along with that the stringent rules and regulations that streamline the sector, active initiatives from the government to encourage the NRI investors are also causing the influx of capital into the Real Estate market. For NRI real estate is one of the safest and profitable investment options, sufficing both emotional and financial aspirations . NRIs can own their dream home in their country and also earn attractive rental income, these reasons makes Real Estate a unique investment option for NRIs.