5 Compelling Reasons for NRIs to Invest in the Lucrative Indian Real Estate Market

The Indian real estate sector has emerged as a promising and booming marketplace for international property investors. With its diverse range of options and advantageous locations, Indian real estate has captured the attention of Non-Resident Indians (NRIs). In this blog, we present five compelling reasons why NRIs should consider investing in the Indian real estate market.

5 Reasons Why NRIs Should Invest in Indian Real Estate

Government policies for NRIs

The Foreign Exchange Management Act FEMA was passed by the ordinance of the central govt to ease cross-border payments. This act warrants a secure transfer of your money since every transaction under the FEMA act is processed through authorized persons, thus easing the home buying process.

Transparent Transaction System

NRI investors seeking to invest in Indian real estate can have peace of mind knowing that the transaction system has become more transparent and secure. The implementation of RERA in 2016 has significantly reduced fraud and project delays associated with real estate purchases. This regulatory framework empowers property buyers, including NRIs, by providing them with more control and protection.

Property Price Appreciation

Major metropolitan cities such as Mumbai, Chennai, and Hyderabad have witnessed substantial property price appreciation. These cities offer location advantages, top-notch amenities, gyms, reputed developers like Sunteck Realtyand excellent proximity to public transportation, making them highly attractive to investors.

Furthermore, the simplified payment regime and increasing demand for commercial properties have contributed to higher property prices in the Indian real estate market. NRIs can expect an impressive return on investment, particularly in the commercial sector.

NRIs can benefit from the above trends by investing in properties that are poised to experience long-term value appreciation.

Tax Benefits

Investing in the Indian real estate market presents a myriad of advantages for Non-Resident Indians (NRIs), and one compelling aspect that deserves special attention is the array of tax benefits available to them. These tax incentives not only make investing in Indian real estate financially rewarding but also provide a platform for long-term wealth creation.

Section 80C: Maximize Deductions on Repayment of Principal Amounts

NRIs can leverage Section 80C of the Indian Income Tax Act, which allows for a maximum deduction of ₹150,000 per annum on the repayment of principal amounts. This deduction enables NRIs to reduce their taxable income significantly, thereby lowering their overall tax liability. Moreover, NRIs can also avail deductions for registration charges and stamp duty paid during the property purchase, further enhancing their tax savings.

Section 24: Deduction on Repayment of Interest on Home Loans

Under the head ‘income from house property,’ NRIs investing in the Indian real estate market can claim deductions on the repayment of interest on home loans through Section 24 of the Income Tax Act. This provision allows for a deduction of up to ₹200,000 per annum. This tax benefit not only reduces the financial burden of interest payments but also contributes to the overall affordability of owning a property in India.

Section 80EE: Additional Deduction for First-Time Homebuyers

For NRIs purchasing their first home in India, Section 80EE offers an additional deduction of ₹50,000 per annum on home loan interest. This incentive is designed to encourage first-time homebuyers among NRIs, providing them with an extra financial advantage. By taking advantage of this deduction, NRIs can further reduce their taxable income, thereby optimizing their tax savings while fulfilling their dream of owning a home in India.

These tax benefits underscore the Indian government’s commitment to attracting NRI investments in the real estate market and fostering long-term economic growth. By investing in Indian real estate, NRIs not only gain access to a lucrative market but also benefit from these tax incentives, which amplify their returns on investment and solidify their financial position.

Changing Landscape

In addition to the emotional connection, NRIs are increasingly turning to the Indian real estate market for investment purposes. Previously, rental yields typically ranged between 2% and 3%. However, the market has witnessed a significant surge, with rental yields now ranging from 3% to 5%, making real estate a highly favorable investment decision. Moreover, over the past two years, key localities in major cities have experienced substantial capital appreciation, further fueling the interest of NRIs in purchasing residential properties in India. This upward momentum is expected to continue not just this year but also in the foreseeable future.

This shift in market dynamics has resulted in a growing demand for larger and more luxurious homes equipped with modern amenities. With ticket sizes mostly exceeding INR 80 lakh, there is a clear inclination towards gated communities that offer easier technology-enabled management. NRIs recognize the value of investing in properties that not only provide a comfortable living environment but also offer potential for significant returns on investment in the long run.

As NRIs actively seek out such lucrative opportunities, the Indian real estate market is undergoing a transformation, catering to their evolving preferences and investment goals. The demand for high-end residential properties is witnessing an upswing, and developers are increasingly focusing on delivering premium projects that align with the discerning tastes and aspirations of NRIs. By investing in such properties, NRIs can not only diversify their investment portfolio but also capitalize on the growing market trends and unlock substantial financial gains in the years to come.

Conclusion

With a robust economy, diverse investor opportunities, and favourable market conditions like those offered by luxury Real Estate in Mumbai, the Indian real estate sector presents an enticing proposition for NRIs seeking to invest in a lucrative market. The government’s initiatives promoting transparency, and investor-friendly regulations, further contribute to the attractiveness of Indian real estate investments. Moreover, higher ROI, and property price appreciation are additional compelling reasons for NRIs to consider capitalising on the vast potential of Indian real estate. By leveraging these five reasons, NRIs can make informed decisions and seize the opportunities presented by the dynamic Indian real estate market.

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