NRI Investment in Indian Real Estate

May 24th, 2023

NRI Investment in Indian Real Estate

A non-resident Indian, or NRI in short, is an Indian citizen who spends 182 days outside of India during a fiscal year but still has close links to their country of origin. An estimated 30 million NRIs live in different parts of the world, making up a dynamic and diversified community that includes people from different cultures, languages, and occup ations. NRIs have significantly benefited their adoptive nations while maintaining ties to their Indian heritage.

Investing in Indian real estate offers NRIs several advantages, including the potential for high profits, a broad investment portfolio, and a connection to their home country. By selecting from many property types and locations, NRIs may tailor their investments to their preferences and objectives.

In the Indian real estate market, NRIs have several opportunities to invest in residential, commercial, and industrial properties. The estimated 30 million NRIs who live abroad have significantly increased their investments in the business in recent years. Favourable currency rates, robust rental yields, and potential property value rise are all advantages for NRIs.

Advantages of NRI Investment in Indian Real Estate

  • Long-term Capital Appreciation

    Over the past several years, there has been a significant increase in property values, and this trend is anticipated to continue. For NRI investors, this offers excellent chances to earn large returns on their capital over the long term.

  • Rental Income Potential

    Due to the rising demand in the Indian real estate industry, NRI investors are likely to enjoy high returns on their investments in properties in India. Compared to other investment choices like fixed deposits or bonds, Indian real estate has greater returns. NRIs might profit from an increase in property value as well as rental income.

  • Ideal Exchange Rate

    NRIs may currently receive more for their money by investing in the Indian rupee at the present currency rate, which is good for them. Although the rupee has historically been unstable, NRIs can profit from currency gain if they have a long-term investing vision.

  • Easy Investment Procedure

    By permitting NRIs to invest in real estate through several channels, the Indian government has simplified the investment procedure for foreigners. It is straightforward and hassle-free for NRIs to invest in Indian real estate from anywhere in the globe thanks to the process.

  • Diversification of Investment Portfolio

    NRIs may have the chance to diversify their investments by investing in Indian real estate. Investment in real estate protects from market instability and can assist NRIs in risk management.

Legal and Regulatory Considerations

Anyone who has conducted business overseas or has travelled abroad can testify to the fact that the government prefers to keep a tight rein on the cash that is exported. This is necessary to stop the export of foreign currency, money laundering, and other related operations, among other things. The Foreign Exchange Management Act (FEMA), which has been in effect since 1999 by the Indian government, controls the flow of foreign cash across Indian borders.

Assume that you are now or recently become a non-resident Indian or NRI. In that situation, you must adhere to new rules to transfer or receive money inside India. All financial transactions into or out of India are managed and under the jurisdiction of the Foreign Exchange Management Act, or FEMA. Your ordinary Indian bank account will be transformed into an NRE account or another appropriate account when you become a non-resident Indian (NRI).

The FEMA requirements that every NRI has to be aware of are listed below.

Maintaining a Clean Bank Account

You are legally compelled to open specified sorts of bank accounts that are only available to non-resident aliens (NRIs) when you become an NRI. These are listed below:

  • To transfer money earned outside of India back into the nation, an NRO account is necessary.
  • An NRE account is a particular kind of account that may be used for moving or repatriating assets like money and securities.
  • An amount denominated in a foreign currency is kept in a bank account with the designation FCNR (B). Only rupee transfers are covered by the phrases NRO and NRE.


NRIs are allowed to make unlimited investments in repatriable or non-repatriable transactions, except PPF and other minor savings plans.

Immovable Property

Individuals of Indian descent, known as Persons of Interest (POIs) and NRIs are permitted to acquire both residential and commercial properties in India. The acquisition of plantations, farmhouses, and agricultural property are the exceptions to this norm.

Current and Immovable Assets

According to FEMA laws, NRIs can send money to India that they have earned from assets that are kept overseas but may be repatriated, including rent from property owned abroad.

Reserve Bank of India (RBI) Regulations for NRI investment

The RBI often releases recommendations explaining the law and giving NRIs broad permission to purchase certain immovable properties in India without needing further RBI clearance. Under these guidelines, the RBI has universally authorised NRIs to acquire some moveable properties in India.
It is legal for NRIs to purchase either commercial or residential real estate in India. However, they are not permitted to own or possess plantation homes, farmhouses, or agricultural property in India.
In light of this, NRI investments in India must be either residential or commercial. Even after the deal is complete, they don’t need to inform the RBI of these acquisitions. An NRI may own an unlimited number of residential or commercial properties in India, as well.

Real Estate (Regulation and Development) Act (RERA) Compliance

According to Know Your Customer (KYC) regulations, an NRI must present a copy of their passport and the pages that include their name, photo, date of birth, and address as well as a copy of their Permanent Account Number (PAN), which serves as their country’s identification. Additionally, an international address is required – either the correspondence address or the permanent address outside of India must be provided.

Financing/Home Loan Options for NRIs

The following situations qualify an NRI, or Person of Indian Origin, for a house loan:

  1. To purchase a constructed home or apartment.
  2. To buy a plot of land so that one may build a house on it. For those in need of a mortgage, composite housing loans are an option. These loans may be used to pay for both the purchase and construction of a home, but they can only be used for up to 60% of the total amount sanctioned. A land loan, also known as a plot loan, is an option if one wishes to invest in a vacant plot without having immediate intentions to build a house. It is comparable to a home loan with a few important distinctions.
  3. To make improvements, additions, and repairs to a house, with a maximum budget of Rs. 15 lakh.
  4. To buy a second home or flat, whether or not the borrower already possesses one that was purchased with a loan.

Eligibility for Home Loans

  1. To qualify for a loan, an NRI must be between the ages of 21 and 60 or have reached retirement age (whichever comes first) at the time of loan maturity. The maximum age, however, varies from bank to bank.
  2. It is also taken into account whether the NRI is a paid employee or an independent contractor.
  3. A total of two years’ worth of job experience should include at least six months of experience working abroad.
  4. To qualify for a loan, an NRI must be between the ages of 21 and 60 or have reached retirement age (whichever comes first) at the time of loan maturity. The maximum age, however, varies from bank to bank.
  5. The recommended minimum monthly income is Rs 5 lakh, however, this varies from nation to country.

Documentation Required for Loan Application

  1. Identification documents such as a driving licence, passport, green card, PAN card, or Aadhaar card.
  2. Address evidence such as an Aadhaar card, a driving licence, a voter identification card, an ID card provided by the Indian government, a gas, or electricity bill, or a property tax receipt
  3. Birthdate records such as a passport, PAN card, or Aadhar card
  4. Signature Proof can be provided via a passport, PAN card, or bank statement.
  5. Application for a house loan that is fully completed, officially signed and includes each applicant’s most recent passport-size photo
  6. Processing Fee and relevant checks.
  7. Borrowers must sign all provided original and/or photocopied papers themselves.
  8. Additional security must be offered, such as an equitable mortgage on a home or flat, a guarantor, or LIC insurance.

The amount of a house loan that one is eligible for is entirely dependent on income, housing needs, ability to repay the loan, and prior credit history. The annual percentage rate is from 8.2% to 12%, including a processing charge that is paid upfront and ranges from 0.25% to 3% of the loan. Loans are reimbursed solely in Indian rupees through EMIs. Loan repayment terms range from three to thirty years.

Risks and Mitigation Strategies

For Non-Resident Indians (NRIs), investing in India and its real estate may be an excellent way to benefit from India’s economic expansion and increase their wealth. But great profits come with great risks, too, therefore it’s crucial for NRIs to efficiently manage their assets to reduce these dangers. Let’s now explore how one can control the risks in NRI investing.

The Financial Risk Associated with Real Estate Investment

While investing in real estate, many people have incurred significant debt. But did you know that borrowing money to finance an investment raises the risk? You read that right – the risk is closely correlated with the amount of debt incurred. Interest rates fluctuate frequently, which might result in rising borrowing prices, which is unquestionably negative for you.

Risk Management

This type of risk is dependent on managerial talent. Its responses to shifting economic conditions, property maintenance practises, lease negotiations, etc., all have an impact on this. Both commercial and residential properties are affected. You need to beware of the difficulties that property managers and owners face when attempting to reclaim control of their properties due to India’s outdated tenancy legislation. Therefore, for both residential and commercial properties, management should use registered leases.

Liquidity Risk

When there isn’t an ongoing market or not enough buyers and sellers, selling a home might be difficult. In these cases, the only options are to undersell the home or wait a longer time—up to a year—for the perfect offer!

Regulatory Risk

Another important risk is posed by legal requirements including lease terms, registration procedures, property use restrictions, and other constraints imposed by governmental bodies. Before investing, one must consider these risks.

Popular Investment Destinations

It’s crucial to understand the many factors that make a city worth investing in. NRIs frequently take a number of variables into account when deciding on their ideal city for real estate investment. They are on the lines of increased employment possibilities, better commute, renowned healthcare facilities, and reputable educational institutions.

Here is a list of all the Indian cities that are likely to attract greater NRI investments shortly:


Bengaluru, a city of parks, breweries, and startups, is the ideal real estate investment location. The demand for real estate has grown significantly, and prices appear to be in line with the demand, since most significant multinational firms, hotel chains, and manufacturing industries have established offices in Bangalore. Bellandur, Banashankari, in and around Electronic City, and closer to Devanahalli are popular neighbourhoods. Due to the development of more metro lines that will connect commuters to several other crucial areas of the city, traffic congestion is also expected to be resolved shortly.


Due to its low cost of living, particularly when it comes to real estate, Hyderabad is regarded as one of India’s most inexpensive major cities. Numerous major global corporations have opened operations in the city due to its excellent infrastructure. Two extensive national highway networks—NH765 and NH44—pass through the city, adding to its exceptional connectivity.


The commercial capital of India, Mumbai is one of the fastest-growing cities in the country as a result of the large number of individuals wishing to settle here. It is no doubt that there is an increase in NRI real estate investments in Mumbai. Despite being one of the most expensive cities to live in, there has been a significant demand to invest here. Hence, developers are constantly catering to this ever-increasing demand.


For home buyers, investing in Delhi might be a fantastic choice. There has never been a better time to invest in this thriving metropolis, which has a robust transit network, several future projects, and social infrastructure.
For individuals residing in Delhi-NCR, work options have dramatically risen during the past several years. The desire to live in the capital state is at an all-time high as a result of numerous foreign firms and industries setting up operations in Gurgaon and Noida.


Pune is developing into a hub for communication, technology, infrastructure, and many other businesses. Since the returns on investment have been so high, it is also recognised as one of the finest cities to invest in for real estate. Experts predict a significant growth in real estate in Pune of 75% for the next year, which is consistent with their prediction.
Future projects like the Mumbai Pune Expressway, Industrial Park, High Capacity Mass Transit Route, and the Pune Airport seek to not only improve the quality of life for residents of Pune but also to provide numerous employment and financial benefits.

GIFT City, Gandhinagar & Ahmedabad

Over the years, the real estate market in Gandhinagar and Ahmedabad has steadily expanded. Gandhinagar, one of the most important cities in Gujarat, is also known as the Twin City of the state. Gandhinagar is currently the capital of Gujarat, making it a desirable place for many individuals to buy real estate here.

Ahmedabad is on track to join the nation’s first 20 smart cities once the Smart City project is completed. In order to accommodate the city’s expanding population, the Ahmedabad Urban Development Authority has recently bought 6800 hectares of land on the outskirts of the city.


Due to its cheap interest rates and numerous discounted offers by renowned developers in the area, Chennai is one of the best places in India to invest in real estate. There are many competent and professional builders in the area that go above and above to make each job spectacular.
Travelling to and from the city is made simpler by the Chennai-Kanyakumari Industrial Corridor and the Chennai-Bangalore Expressway. There are several work prospects in Chennai because of the presence of the industrial, IT, and automobile sectors.

Taxation Considerations

In terms of taxes, all resident and non-resident Indians who make money in India are subject to taxation by the government of India. NRIs are eligible to purchase both commercial and residential properties in India. However, any income earned on these assets is liable to Indian taxation. Property rents that exceed the basic exemption limits are included in this, along with capital gains on real estate investments and other sources of income from investments in shares, mutual funds, and term deposits.

The rent income from an NRI or PIO’s property that is located in India is credited to their NRE or NRO accounts after paying taxes and is then readily transferable back home. Income from a property in India is taxable, and the tax is determined as if the income were that of an Indian person. The interest on a Non-Resident Ordinary Rupee (NRO) account is subject to conventional taxation in India, but the interest on a Non-Resident Rupee (NRE) account is tax-exempt.

Capital Gains Tax and Exemptions

Taxes on long-term capital gains are 20%. Take notice that NRIs must pay a 20% TDS on any long-term capital gains they get.

Sections 54, 54EC, and Section 54F allow NRIs to seek exemptions from long-term capital gains taxes. Therefore, while filing a return, an NRI may benefit from the exclusions from capital gains and request a refund of TDS deducted from Capital Gains.

Benefits Under the Double Taxation Avoidance Agreement (DTAA)

The following income received by NRIs is exempt from double taxation under the Double Tax Avoidance Agreement:

  1. Offered Indian services.
  2. Earned a salary from India.
  3. Gains on the transfer of property in India.
  4. Indian fixed deposit.
  5. Indian savings bank account.
  6. If the NRI’s income from these sources is subject to tax in their home country, they can avoid paying two taxes by taking advantage of the DTAA’s advantages.

Real Estate Investment Options

  1. Residential Properties and Their Advantages

    Mention SOBHA’s some of the prime location’s residential properties across India and brief about their benefits and provide a short highlight about each project mentioned here.

    In areas of Bangalore like Hennur, Electronics City, Yelahanka, and Whitefield, NRIs have made significant real estate investments. However, after the epidemic, they are now investing in areas outside of cities and far from IT Parks. Many have now spread out to the city’s outskirts, like Devanahalli, Kannamangala, etc. Here are some great investment options in Bangalore:

    North Bangalore:

    1. SOBHA Dream Gardens
    2. SOBHA Oakshire

    South Bangalore:

    3. SOBHA Royal Crest
    4. SOBHA Townpark- Manhattan & Brooklyn Towers

    East Bangalore:

    5. SOBHA Galera


    Kerala’s real estate market is expanding quickly. The rise of the IT industry and the government’s development ambitions have both had an impact on Kerala’s real estate market. One can anticipate significant investment from both locals and NRIs.


    If you look at Thrissur from the real estate standpoint, it is one of the fastest-growing cities. If you invest in a house or apartment in Thrissur, you may expect to receive exponential returns because the value would rise with time. As a result, investing in apartments will yield a positive return, especially in areas like Kuttanellur, Attore, and Punkunnam.

    SOBHA Metropolis


    One of the most sought-after real estate destinations in the city is Kochi’s Marine Drive. Due to the breathtaking view of the backwaters and Kochi Harbour and its boardwalk, which is perfect for a leisurely stroll, this attractive promenade is well-liked by both city dwellers and visitors. Most NRIs investing in Kerala are eyeing Marine Drive.

    Atlantis & Marina One


    Due to its tremendous expansion and development, Trivandrum, the capital of Kerala, is one of the most sought-after locations for real estate investment. Due to its proximity to the city’s main attractions, Akkulam, one of the most well-liked residential neighbourhoods, is a real estate hotspot.

    Whispering Hills


    In the last decade, Pune has experienced enormous urban growth, including the construction of malls and sizable retail centres, and the metro rail. Several renowned corporations have relocated their headquarters to this famed city. Kothrud is one of the most preferred destinations for real estate investment in Pune.

    SOBHA Nesara


    A recent poll found that 20% of NRIs seek to purchase real estate in Delhi-NCR. For NRI investors, neighbourhoods in Noida and those along the Dwarka Expressway are becoming profitable. Over the course of two years, such places have seen an appreciation of 5-8%.

    SOBHA City and International City


    Gujarat has been a hot favourite among NRIs for real estate investments. Between Ahmedabad and Gandhinagar lies the major business centre known as GIFT (Gujarat International Finance Tec-City), which features world-class infrastructure and integrated townships.

    SOBHA Avalon and SOBHA Dream Heights

  2. Commercial Spaces and Potential Returns

    In order to reap maximum benefits, Non-Resident Indians have started investing in commercial real estate in India, especially in recent years. NRIs can profit from investing in India’s developing real estate sector as the country’s economy continues to expand gradually.
    Rapid economic expansion
    The demand for commercial real estate is increasing as a result of India’s economy’s rapid growth, company expansion, and increased consumer expenditure. It gives NRIs the chance to invest in commercial properties that are probably going to appreciate and make money from rentals.

    Government Assistance

    By providing incentives and easing rules, the Indian government is aggressively promoting foreign investment in commercial real estate. For NRIs, it may be simpler to invest in commercial real estate and benefit from possible profits. All forms of NRI investment in India have increased as a direct result of the RERA and GST Acts.

    Growing Demand for Commercial Real Estate

    The millennial generation in India is quickly adjusting to start-ups and entrepreneurship, which is driving increased demand for commercial real estate there. Another factor contributing to the rise in demand for commercial real estate is the quick expansion of logistics, distribution, and IT hubs as a result of the expansion of e-commerce operations.

    Tax Advantages

    When investing in commercial real estate, NRIs will be able to benefit from tax advantages such as deductions for loan interest, depreciation, and other costs. Compared to other investment forms, commercial real estate may be more tax-efficient as a result.

    You should consider speaking with a tax professional or a legal real estate specialist before making an investment. It is quite helpful to have a real estate developer on board when seeking to make an investment in the Indian market from overseas.

  3. Plots of Land and Future Development Opportunities

    The land is one of the most preferred types of investment among Indians as well as NRIs since it brings with it a bouquet of benefits:

    The value of the land is expected to increase more over time: Land is in high demand, yet there is a relatively small supply. Because of this, a piece of land is one of the most coveted possessions among Indians, both residing in India and abroad.

    Land doesn’t require any upkeep: Land requires very less care and maintenance. When compared to other kinds of properties such as an apartment or an individual house, a plot of land requires close to no maintenance at all. This is ideal for NRIs who needn’t monitor their plot regularly.

    Land offers a great deal of freedom. You may decide to construct a commercial building or a residential plot. Both of which will fetch you consistent profits over time.

Seeking Professional Advice

When purchasing property in India, NRIs may save a tonne of time and money by working with a reputable real estate agent. A trustworthy real estate agent can guide NRIs through India’s legal and regulatory environment, assist them choose the best homes that fit their needs and tastes, and negotiate advantageous terms with the seller.


NRIs would be prudent to think about investing in Indian real estate if they want to diversify their financial portfolio and keep links to their home nation. Rising property values, a steady market, and the potential for significant profits are just a few advantages of investing in Indian real estate.

NRIs can secure a reliable source of passive income in India by understanding the legal environment, selecting the ideal location, working with a reputable real estate agent, conducting due diligence, comprehending the payment process, looking at financing options, getting property insurance, and using legal services. NRI property ownership in India may be a successful and satisfying endeavour with the correct approaches and assistance.

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