The real estate industry is growing fast and has witnessed a boom in the last couple of decades. Incidentally, NRI investment in India has increased in this phase, thanks to a number of technological developments that have taken place in the industry. This has made it easier for NRIs to make better purchase decisions when they buy property in India. Investors and developers are having a good time in the real estate market, and architecturally refined structures are coming up in the country.
In India, the area of real estate inventory that generates rent is around 537 million sq. ft. the estimated worth of this property is over $70 billion. NRIs get a favourable investment avenue from these properties. Indians who have settled in other countries like Europe and the USA often invest in the real estate industry in India in order to gain greater returns. In developed countries, the returns on the sale of properties are lesser than that of developing countries. Evidently, their investment in Indian Realty turns out to be fruitful.
The scenario for NRI investment in India is quite favourable. NRIs who have settled in the Middle East also invest in the real estate industry in India. This is because they have a limited scope of investing in this sector within their residing country. The legal framework in the Middle East does not foster investments in this sector to a large extent. Moreover, people are also investing in commercial properties, as blue-chip companies opt for these properties for rent and this generates good returns.
Investors find greater security in investing in commercial property. They lease out these properties for 9-15 years. The minimum lock-in period for these properties is around 3-5 years. They can yield good returns as rents from these leased properties. This is another important factor favouring non-resident Indian investment in the country.
However, certain risks are involved in the process and non-residential Indians keep an eye on these threats before investing in the property here. The first important aspect they need is the domain knowledge in the industry, without which, they cannot carry out business successfully in the country. The ticket sizes for commercial properties in India ranges between INR 5 crores to INR 40 crores. This is a huge amount and investors with low budget cannot get into the industry. Besides, many investors are reluctant to invest too high, fearing a loss in the market. The investors need to conduct researches extensively on a regular basis in order to evaluate the future potential of the property. Based on this, they negotiate with the property dealers, initiating sales calls that can liquidate the asset in future.
Well, another factor that the NRIs are concerned about is the geographical isolation. They cannot personally overview the managing mechanism of the property. As a result, NRI investment in Indian real estate remains limited to particular segments. Besides, they are concerned about the clearance of maintenance and tax dues. Third party players like agents are involved in the deal, which increases the concern for the NRI investors. The complications escalate further when they have to visit the country for the legal proceedings while acquiring and selling a property. In spite of all these factors, Real Estate Investment in India from NRIs has drastically increased in the last few decades.
