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Indian property market is seen as a lucrative property investment option Image Credit: Shutterstock

Highlights

India’s stable government and growing economy are attracting NRIs to buy property in the country

NRIs in the UAE are always eyeing real estate assets back home, as owning property in India gives them a sense of belonging. With India’s stable government and rising economy, it’s not just the NRI investors here who see value in buying property in India, others view the Indian property market as a lucrative property investment option as well.

This not only propels economic growth, but also brings about appreciation in prices of properties built on the outskirts of metro cities.

- Agnelorajesh Athaide, Chairman and MD of St Angelos VNCT Ventures

Agnelorajesh Athaide, Chairman and MD of St Angelos VNCT Ventures, an affordable designer villas developer, believes India is currently enjoying the highest quantum of infrastructure development the nation’s ever seen. “This not only propels economic growth, but also brings about appreciation in prices of properties built on the outskirts of metro cities. This appreciation is always disproportionate to the capital invested, which everyone, including the NRIs, are interested in.”

In the budget, says Navin Makhija, Managing Director, The Wadhwa Group, the government’s focus on a firm infrastructure push by announcing Rs100 trillion investments will boost the real estate sector and help in employment generation. “The government is also consistent in addressing affordable housing, be it giving infrastructure status to this segment in the previous budget to the exemption of Rs150,000 (Dh7,986) in income tax on home loans under affordable housing in this budget. This is a big move as it will benefit a broader segment of homebuyers and increase demand.”

Property trends

Dinesh Hegde, CEO, Thea Estate Developer in Bengaluru, says that one of the top choices is the financial hub, Mumbai, not just in terms of the value of purchase but also the number of transactions that happen. “Bengaluru and Pune are also favourites followed by north and extreme south Indian cities,” he says.

An apartment is the most preferred form and buyers require facilities such as CCTV for security, a gym, pool, squash court and more.

- Dinesh Hegde, CEO, Thea Estate Developer in Bengaluru

Hegde notes that the most purchases are in the bracket of Rs7 million to Rs12.5 million, excluding the uber luxury segment. “An apartment is the most preferred form and buyers require facilities such as CCTV for security, a gym, pool, squash court and more.”

Citing Anarock’s recent consumer survey, Shajai Jacob, CEO — GCC (Middle East), Anarock Property Consultants, says, “Nearly 50 per cent of the NRIs prefer to buy luxury properties priced above Rs8 million, while 50 per cent now wish to buy properties in the affordable and mid-segment (within Rs8 million budget). A whopping 44 per cent of NRIs responded preferring to buy 2BHKs of compact sizes.”

Umesh Jaandiyal, Vice-President, International Business, Omkar Realtors & Developers Rep Office, also finds the compact housing project to be a favourite hot spot for NRIs investment because of the ever increasing rental yields owing to its strategic location closer to CBDs. “The Indian market now is an end-user-driven market and developers are offering a new proposition of compact 1- and 2-bed efficient homes, fulfilling all the parameters for investment.

“The residential rental yields in major Indian cities (as per the industry report) seen are in Delhi NCR: 2.63 per cent, MMR: 3 per cent, Pune: 3.10 per cent, Chennai: 2.72 per cent, Kolkata: 2.65 per cent, Bengaluru: 3.30 per cent and Hyderabad: 3.70 per cent.”

Financing options

While many NRI investors are cash buyers, they can receive funding support from leading Indian financing institutions. “Home loan products are the same for residents and NRIs and many banks offer 85 per cent LTV on apartments and individual houses and up to 70-80 per cent on plots,” says Hegde. “Besides, many NBFCs also offer NRI home loans.”

Jaandiyal says the options for buyers are bank subvention schemes, which most Indian developers offer to NRIs. “It gives less burden to them in terms of the initial down payment for projects under construction. Through the scheme the first EMI is only at the time of possession, meaning no interest on the loan for the entire period of construction.”

Banks also offer construction-linked plans. “Here, the NRI bank releases payment to the developer based on construction progress and the NRI pays to the bank as per the EMI payment schedule,” he adds. “Also, there are the developer subvention schemes such as 20:80/10:90, which are payment plans asking for a minimum initial down payment against purchase of a unit in all the under-construction projects. The balance payment is made to the developer at the time of possession.”

Jacob adds that buyers get home loans at both fixed and floating interest rates. A few banks are also offering fixed-cum-floating interest wherein one has to pay a fixed interest for the first few years (3-6 years), and then start paying floating interest, he explains.

“NRIs usually have to pay a higher rate of interest as compared to an Indian resident. Also, the tenor for a home loan usually ranges between 5 and 20 years and in only select cases go up to 30 years for salaried professionals.”

He further adds that some banks allow NRIs to club their spouse’s or sibling’s income with theirs to improve eligibility, but others may only consider the principal borrower’s income. Hence, it’s essential to have a good credit history and high credit score as many banks insist on checking the credit report in the country of residence and India, says Jacob.