Why NRIs continue to invest in real estate

Comparing Investments: Real Estate Vs Crypto Vs Gold Vs Mutual Funds

Real estate has turned out to be a prominent choice post pandemic— especially for the NRIs, who expect a safe return home and plan about working in their hometown.

The demand for luxury projects, plotted developments, cost-effective dwellings, and second homes have seen an improvement. The trend has slowly moved to the need for land to occupy additional indoor spaces as well as open spaces.

The job uncertainties worldwide have pushed NRIs to opt for their property back home, to be useful in the future. While thinking from the perspective of investment, India paves the way for huge capital appreciation, growth, and greater ROI.

The NRI community looks for ways to capitalize and build assets within their domestic base. This blog post discusses the reasons and the benefits of NRIs who engage in real estate investment in detail.

Rising Interest among NRIs in real estate

The Indian real estate sector remains a hot choice among property investors, especially NRIs from all over the world. The NRI investments of FY 14 at 6 billion USD have moved to a whopping 13.3 billion USD in 2021. It is estimated that the NRI investment will rise to 14.9 billion USD in Indian real estate by FY22.

Firstly, the rental demand has gone up and the yields they can make from it continue to improve. Real estate offers great ROI to the investors since the land value appreciates over time. NRIs can purchase property as either a single owner or joint ownership with the other NRIs.

Why has Real Estate become a necessity for NRIs?

Many NRIs focus on exploring various properties with the need of sitting in the comfort of their homes to engage with the channel developers and partners. NRIs invest in real estate even amidst the devastating times to completely secure their lives. Here are the reasons behind the increasing investment among NRIs in real estate.

● Decreasing value of the Indian Rupee

The NRI community enjoys the privilege of conversion of their foreign earnings into lucrative investment opportunities in India. When they consider the falling rupee value against, for instance, a dollar or Dinar, they find the real estate investment affordable. The purchasing power of NRIs further grows with the falling value of the Rupee.

For instance, a piece of land with a value of INR 75 lakhs can be around 1 lakh dollars currently. But when the Rupee value is 65 for a dollar, the cost would be calculated to be 1,15000 dollars, which is a major difference. Also, for heavy investments in real estate, NRI investors can make huge savings from the margins.

● Growing market

The Indian economy has faced a huge impact after the Coronavirus challenge and the changes it has created globally. But the time is back when the economy is fully equipped. The growing demand for real estate investment in India is a reason why NRI investors feel confident to invest in assets.

This will in turn lead to an upsurge in the property prices, where the NRI investors can expect a huge Return on Investment (ROI) for the money they spend. Further, the investment types like fractional ownership, commercial real estate, coworking space, and warehousing also pose amazing opportunities for the NRI real estate investors.

● Reduced interest in alternative investment modes

Conventionally, the foreign investors preferred the other investment sources like Gold, Fixed Deposits, and the Equity market. However, the investments in these options are viable to the volatile constraints of the market. Your money can be on the verge of risk where you can end up in loss.

Nevertheless, the fixed deposits and Gold deposits have falling returns which make most expat investors stay away from these investments. Most fixed deposits include an interest rate of about 4-5%, and if you look at this amount, it is almost equal to the rate of inflation, resulting in diminishing returns.

But, real estate investment prevails as the most beneficial option to the NRI community with high returns. Even the booming opportunities across Tier II and Tier III cities have motivated NRI investors to make real estate investments across these cities. Since the lands become the future engines of development, they assure greater returns to keep the revenue of investors growing.

● Simplified tax system

India is one of the most comfortable countries to earn foreign currencies and let NRIs park abundant money through a simple taxation regime. NRIs additionally obtain an indexation advantage for the properties held in the country. For instance, the immovable properties held for over two years are considered long term assets and earn an indexation advantage at a 20% simplified taxation policy. As per the Income Tax Act, there are also tax deductions under the sections such as 80C and 80 TTA.

This ensures that NRIs get a hassle free investment opportunity across the Indian real estate market. NRIs can transfer their money into the NRO account to pay the seller from the account while buying a property. The NRI investor can also directly transfer the amount to the seller while buying the property.

3. Mutual funds

Mutual funds make up a sum of money that a group of investors invest to use in securities like bonds, stocks, money market instruments, etc. The professional money managers operate these funds and allocate the assets to create capital gains or income for the investors.

Final Thoughts

Being a resurgent economy, the real estate segment in India keeps growing day by day. The NRI investors can hence move forward to reap amazing benefits from the real estate investment in the long term.

It is also necessary to look for a reliable and best real estate company in India that supports you in the process of buying land most beneficially and gives high returns. Check out Landvision to make your real estate investments worthwhile and serve you with long term benefits.

● The funds depend on the state of the markets, hence when market values drop, you end up losing miserably.