Real estate planning in India has always been the hot favourite for property investors across the globe. Out of the many reasons, a few predominant reasons for India to be on the top list of many for estate planning are its location, growing economy, return on investments, and promising market. Interestingly, NRIs (Non-Resident Indians) also take a keen interest in the Indian real estate market.
Despite the short-term challenges owing to COVID-19, the measure by the Indian Government – Atmanirbhar Bharat Abhiyan – has infused great optimism amongst many about the future of India, the economy, and thus the real estate market. Discussed here are four major reasons why you as an NRI must invest in the Indian real estate market post pandemic.
- Booming market
Owing to the COVID-19 pandemic, the Indian economy has faced acute economic hardships and challenges. However, now the pandemic is in control and the Indian economy is reviving. Pent-up demands are steadily being met, and this has given high hopes to many that the economy will drastically grow in the upcoming years.
Such growth is likely to enhance real estate prices, and hence experts are expecting high returns from real estate investments. Under real estate, you can focus on segments like co-working spaces, fractional land ownership, warehousing, and commercial real estate.
- Comparatively lower interest on other financial instruments
Traditionally, NRIs used to prefer investment instruments like gold and equity. However, such investments are susceptible to market volatility i.e., the invested money stays at perpetual risk of loss. Additionally, the declining return potential on fixed deposit and equity markets before and during the pandemic discouraged many to invest in them.
While you as an NRI can invest in a mutual fund to meet your long-term investment goals, real estate is a lucrative investment choice for you. Major upliftment in Tier II and Tier III cities makes properties here great investment opportunities. These smaller cities are expected to become growth engines and drive huge returns over the long term making real estate investment an enticing deal.
- Depreciating Indian rupee value
You, belonging to the NRI community, hold a unique benefit of converting your foreign income into profitable investments in India. With the rupee value at its all-time low against the US dollar, real estate investments have turned out to be an approachable and affordable deal.
With the value of the rupee falling further, your buying power has increased manifold. For instance, a piece of land costing Rs 75 lakh currently costs around $95,000. However, at a rupee value of Rs 60 against the US dollar, the same would have cost $125,000. Thus, in the case of such heavy investment for NRIs in India, even a marginal dip in the rupee value results in huge savings.
- Simplified tax regime
As India is one of the foremost nations to receive considerable foreign currency, a simplified Indian tax regime encourages you to invest surplus funds in India. Also, you as an NRI can avail indexation benefit on properties held in India. For instance, immovable properties/land held for over two years is considered long-term capital asset and hence receives an indexation benefit of 20%. Also, the Indian Income Tax Act, 1961 permits tax deductions under several sections such as 80TTA and 80C.
Besides this, the simplified payment rule even motivates you to invest in the real estate market of India. While buying a property or land, you can transfer the fund to your NRO (Non-Resident Ordinary) account and through this account, pay the seller.
Final thoughts – Protect your assets with a real estate planner
While acquiring properties for you as an NRI in India is easy, challenges in terms of real estate planning are greater as you often tend to own assets in more than one geographic location. Here’s where you can consider opting for real estate planning services. Such services can help with the process of investing in strategic real estate properties in India and strengthen your investment portfolio.