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NRI Real Estate Story in India:

The $12 billion real estate market in India is on a high growth curve, on the back of a booming economy, increased participation of global players in the Indian market, new technological innovations coming to India, new norms and policies with respect to maintenance of buildings, the general upgradation of infrastructure, entry of some world-class players in the hospitality and entertainment sector, favorable demographics and liberalised FDI regime. The real estate sector is the second largest employer in India. This sector is projected to grow to $50 billion by 2010 at an average rate of 20% per annum. Investment opportunity is expected over $50 billion in the next five years "In India's fast-growing economy, real estate has emerged as one of the most appealing investment areas for domestic as well as foreign investors. The real estate sector will continue to derive its growth from the booming IT sector, since an estimated 70 per cent of the new construction is for the IT sector," a report by Pricewaterhouse Coopers has said. "Favourable interest rates, modern attitudes to home ownership (the average age of a new homeowner is now 32 years compared with 45 years a decade ago), economic prosperity along with a change of attitude amongst the young working population from that of `save and buy' to `buy and repay' and liberalised FDI regime have all contributed to this boom," it said. While the last decade saw the transition of sleepy towns like Gurgaon, Noida and Faridabad into enviable addresses, today these tier I towns, as they are called, are saturated and far beyond the means of the middle class. Naturally, the opportunity in the residential development in Tier-II and Tier-III cities--like Hyderabad, Cochin, Chennai, Coimbatore, Gurgaon and Pune is equally enormous. The real estate industry has a lot of potential as various foreign Real Estate and Finance companies have entered the Indian market. Moreover 100% FDI is allowed in real estate development and the Indian government has played a major role in supporting the growth of the real estate sector by allowing NRI investment in real estate. Mall space is expected to increase dramatically in the coming year, according to a recent report by Merrill Lynch. Property development is no longer merely constructing a building and leasing it out. The tenants of today are well versed with professionally managed buildings. This has made the developers in India appreciate the need to maintain and manage their property in a systematic manner. Overall, the year ahead promises to be a good one for all those involved in the industry- the builders, as well as the consumers. The future of India is set to usher in the gold rush of realty.
Why NRIs Loves Indian Real Estate Market ?

NRIs Investment in Indian Real Estate gain momentum.

The current rupee depreciation presents an opportunity for NRIs to acquire property in India at attractive valuations. The continuous slide of the rupee against the US dollar as well as other currencies has prompted many NRIs to invest in realty in India. Of late, there has been a substantial increase in investments by NRIs in realty here. NRI investors are more inclined towards India as they will be paying fewer dollars to acquire property than they would have last year. According to the Reserve Bank of India (RBI), the net NRI remittance into India is rising, with the current fiscal registering a record net inflow of over USD 12 billion. More than 40 percent of this was for investments in realty. For NRIs, property is cheaper than it was a year ago in terms of dollars. Foreign citizens of Indian origin, whether resident in India or abroad, can purchase property in India for their residential purpose. They are not required to obtain permission from the Reserve Bank of India. According to the Foreign Exchange Management Act (FEMA), an Indian citizen who resides outside India is permitted to acquire any property in India other then agricultural or plantation property or a farmhouse. Thus, NRIs have almost all the privileges that a resident has with reference to purchase of property in India. The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from a NRE or FCNR account maintained with a bank in India. Further, they can sell the property. However, where the property is purchased by another foreign citizen of Indian origin, the funds towards the purchase consideration should either be remitted to India or paid out of the balance in a NRE or FCNR account. A housing loan granted to a NRI is on the same basis and criteria as applicable in case of residents. These include the loan amount eligibility based on income, tenure of the loan and the extent to which the lender can finance the purchase of a house. In case the NRI is not present in India at the time of registration, he can execute a power of attorney in favour of someone who can then execute the documents on his behalf. The normal processes of registration and stamp duty apply. It is advisable to give a power of attorney to some family member who is a resident in India to deal on behalf of the NRI. This will help in taking care of the formalities in India like registering the property, leasing, signing the property agreements and also selling the property. The power of attorney has to be executed properly on a stamp paper, and should be given to a trustworthy person. The property so bought can be rented out and the NRI can earn rental income. The rental income can be repatriated abroad. The NRI can also transfer or sell the property. It is to be noted that the sale proceeds of a property inherited from a resident not exceeding USD one million can be remitted abroad in one calendar year. The sale proceeds of property inherited from a NRI cannot be repatriated. It is to be noted the amount to be repatriated cannot exceed the amount paid for acquisition of the property in foreign exchange received through normal banking channels, or the amount paid out of funds held in a FCNR or NRE account. Also, in case of residential property, the repatriation of sale proceeds is restricted to two such properties. With the rupee depreciating to historic lows against the dollar, it is a good time for NRIs to invest in real estate here. NRIs get the advantage of a weak currency as they would receive more rupees on conversion, which means that they buy the property much cheaper than otherwise.