The Indian property market is increasingly attracting NRI (Non Resident Indian) investment, as many expat Indians effectively become overseas property investors.
In the face of dwindling investment returns, investment advisers are advising NRIs to look for better returns by way of price appreciation and rental income from property investments in India.
Higher returns and price appreciation are predicted by many market studies. A survey by Anarock Property Consultants found ‘Affordable housing is expected to give returns of 8-10 per cent for NRIs followed by 6-8 per cent for mid-segment, 3-5 per cent for luxury and 2-3 per cent for ultra-luxury properties’.
NRI real estate vestment in India is projected to hit $18 billion by 2020, from $10.2 billion in 2018.
More than the price appreciation, NRIs stand to gain from better rental returns. NRIs, mostly end-users, are looking at buying and renting the property out in the beginning, and some years down the line if they decide to return to India, they could stay in them.
On the tax liability front, NRIs, who pay tax on income from rental and capital gain in India, stand to gain.
The recent budget has given permission to divide capital gains from the sale of a property to be invested in two properties – instead of one as allowed earlier increased limit of rental TDS (tax deducted at source) deduction and second self-occupied home to be exempted from notional rental income. This is a major incentive for long-term NRI investors.
Property developers in metropolitan cities like Mumbai and Bengaluru and smaller cities like Pune, Nagpur, Kochi, Chandigarh and Patna are getting a good response from NRIs. As much as 25 per cent of offerings are taken up by NRIs.
It seems that 2019 sees the return the Indian property market as an option for many.