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September - 2014 - Special issue > Home Buyer's Guide

An NRI's Guide to Investing in Properties in India

Dhruv Aggarwala
Co-Founder-PropTiger
Sunday, September 21, 2014
Dhruv Aggarwala
The Indian real estate market is certainly zooming away in the wake of current scenario witnessing a high growth wave. The demand for commercial and residential property is shooting up as never before. Roll eyes in any direction and you will find places making rapid strides in real estate development riding the crest of rocketing demand fuelled by availability of productive property options at rock bottom prices. There are two key emerging trends in the Indian real estate industry. One is a definite shift towards affordable housing and second is the demand for branded homes. Incidentally, both cater to two extreme ends of the customer segment in India. Affordable housing has been talked about for a long time, yet it has not been very successful in India owing to multiple challenges such as unavailability of affordable land parcels, long gestation for approvals, lagging infrastructure to connect remote parcels with commercial hubs and lack of home loan financing for buyers. The new government has brought in an optimistic outlook towards affordable housing by taking multiple positive steps such as removing statutory requirements for home loans up to a certain amount and building infrastructure to connect remote areas and smart cities.
Branded homes are the new buzzword in luxury housing creating a differentiating platform between competitive builders. Disney Homes, Trump Tower, F Residences and Armani homes are some of the brands which are being leveraged by builders.
The NRI Attraction
With the rupee falling, real estate has been one lucrative investment option for non-residential Indians (NRIs). Also, whether the market is booming or not, many NRIs like to have a place back here in India. India is an evolving real estate market and the current growth in this sector has encouraged NRIs to liquidate their properties in India to take benefit of the hike and book huge profit. Also, the return on investment in India is far better than other markets such as the US and UK. Hence, NRIs based out of these countries are willing to invest their money in Indian real estate. Their returns improve if the Indian currency improves over the time period of investment and they get higher returns on their investment.
NRIs also get the benefit of interest rate arbitrage prevailing between their country of residence and India, further boosting their returns. Regions like Yamuna Expressway in Noida, Dwarka Expressway in Gurgaon, Industrial belt of Bhiwadi/Dharuhera/Neemrana in the North, are high growth areas. Whereas, Yelahanka, Devanahalli in Bangalore, OMR and GST in Chennai, in the South are ideal for NRI Investments in India. In the West, Panvel and Kalyan in Mumbai, Wakad and Wagholi in Pune are witnessing exponential growth. There are micro markets across the country where prices are expected to increase with improvement in physical and social infrastructure.
Better Safe than Sorry
The procedure for buying property is more or less the same for NRIs or local buyers. As most NRIs buy property in India without actually visiting the site, they face challenges such as unavailability of accurate information on builder, location and approvals. Hence, many real estate portals are working hard to improve the quality of communication by providing online information on locality pictures/videos, detailed builder information and multiple views of floor plan. Another key challenge faced by NRIs in India is the lack of rules and regulations due to which there is a higher chance of resultant scams and frauds. NRIs need to take extra precaution to ensure they buy property only from Tier 1 developers and that too through a professional channel partner. They should refrain from buying property in prelaunch stages as approvals in India can get delayed for considerable timeframes. `
NRI property buyers should research the project and approvals thoroughly and ideally visit the site before buying property in India or they should stick to reputed developers and prominent localities.

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