Things NRI should consider before investing in India

Author: Pratik Jain, CEO, and Founder of The Stallions

Swift recovery from the pandemic, the quick revival of business across all asset classes, and a series of structural reforms made in the recent past have placed the Indian real estate industry on a high trajectory. The growth in business is steered by the low-interest rate regime and attractive pricing offered by builders and developers.

Furthermore, policy interventions like RERA (Real Estate Regulatory Authority) and Benami Bill are strengthening the prospects for investment. The country is also expected to attract cross-border real estate investment of $2.5 billion in 2022.

At present the Indian property market ensures a healthy capital appreciation potential to investors making this an apropos time for Non-Resident Indians’ (NRI) and Overseas Citizens of India to want to invest in the realty sector. With comparatively low initial capital investment NRIs can attain high returns by ascertaining basic factors before investing.

In this article, we are going to list down the important points that should be kept in mind by NRIs before investing in the Indian real estate market. By ensuring these factors their investment can be obstacle-free and fruitful.

The First and foremost parameter NRIs should keep in mind before investing is the locality infrastructure. It’s imperative to find an area with quality infrastructure because it determines the number of aspects. Decent amount of upcoming residential and business projects in the area, its connectivity in terms of public transport and road network, the area’s proximity to business parks and office centers, and close access to social infrastructures like schools, colleges, hospitals, banks, and malls— are the factors that establish that the locality infrastructure is appropriate for investment.

Locality infrastructure also determines the appreciation rate of the area. If the infrastructure around is good and well-built the circle rate of the place will always increase at a higher pace. Investing in properties that have a high appreciation rate will only ensure high profit.

Also, the rental market or rental yield towards the project should be ensured and cross-checked. Rental yield stands for the amount that a typical tenant is ready to shell out because if the rental value of the property is lesser than the EMI or property tax and maintenance expenditure the deal is not considered that profitable.

The next most important factor is RERA approval, experts advise putting money only in RERA-approved projects because it protects buyers, ensures speedy dispute redressal for consumer grievances and most importantly RERA infuses transparency in all real estate deals. RERA was established under the Real Estate (Regulation and Development)Act, 2016. Along with the regulation of the real estate sector, RERA also acts as an adjudicating body for speedy dispute resolution. The RERA Act leaves no loophole for builders/developers to make fraudulent deals or escape after selling a property. So, it is advisable to only invest in properties that have RERA approval.

Another significant factor is the brand of the developer/builder. It is important to choose a reputed builder with a proper portfolio, completion record, and earlier deliverables, even more so for NRIs because they are not physically present to check on the quality or status of the project. So, if you are an NRI who wants to invest in India, you must keenly choose the builder.

The stage of construction is another important factor for NRIs to keep in mind before investing. Most commonly, investors prefer to put money into the first phase of the project because at that time they get the agreement at comparatively cheaper rates and appreciation is maximum. However, it is vital to gather all information about the builder and the project and cross-check the findings before putting in a single penny. Online reviews should also be checked before making any decision.

If you are a non-resident Indian and wish to earn a substantial amount of profit by investing in the Indian real estate market make sure you keep these factors in mind.