The Indian real estate sector is experiencing a significant surge in interest from Non-Resident Indians (NRIs), fuelled by robust economic growth and substantial infrastructure development.
This upward trajectory in the realty market is being bolstered by a combination of national and regional infrastructure projects, which have greatly enhanced the overall appeal of real estate investments in India. The recent Union Budget for FY2024-25 has further amplified this trend by outlining a strategic roadmap aimed at attracting increased foreign investments, particularly from NRIs. One of the most noteworthy developments in the Budget is the government’s commitment to simplifying the Income Tax Act. This move is expected to bring about a range of fiscal benefits for NRIs, thereby encouraging greater investment from this demographic.
As the basic structure of investment decisions is often influenced by tax considerations, these reforms are likely to serve as a significant catalyst for increased NRI participation in the Indian real estate market. The government’s ongoing efforts to ease Foreign Direct Investment (FDI) norms and regulations related to overseas investments are anticipated to further drive NRI interest. These initiatives are designed to streamline the investment process, making it more attractive for both individual and institutional investors to allocate their capital towards Indian real estate. The target of achieving 20% NRI investment in the sector appears increasingly within reach, thanks to these conducive policy measures.
The Budget’s allocation of INR 3.5 trillion towards infrastructure development for the fiscal year 2024-25 highlights the government’s focus on enhancing connectivity and improving the quality of living across various regions. This increased spending on infrastructure is expected to elevate the attractiveness of real estate investments, as improved accessibility and living standards make Indian properties more appealing to NRI investors. The sentimental and financial value of investing in their home country, coupled with these infrastructural advancements, positions India as a highly attractive destination for NRI capital.
For NRIs considering investments in Indian real estate, conducting thorough research is imperative. Understanding market trends, property valuations, and the legal framework in their chosen location can significantly enhance decision-making. Ensuring the legality of ownership through credible legal counsel, along with seeking professional advice from experienced realtors, can mitigate potential risks and prevent conflicts. NRIs must be mindful of the tax implications associated with their investments, both in India and their country of residence. Analysing currency exchange risks and their potential impact on investment returns is also crucial. Opting for properties developed by reputable and well-established developers can minimise the risks associated with construction quality or project delays, further safeguarding their investments.
