For NRIs, investment in prime residential properties has been something akin to the proverbial “first love”. Having said that, investment in commercial properties by NRIs has also seen an upswing over the years. Investment in commercial properties in India comes with higher rental yield and better capital appreciation. You can expect anything between average rental yields of 6%–10% if you invest in a good commercial property.
Factors favoring NRIs to invest in commercial properties in India
- Easy investment options
- Fall of the INR against the USD
- Reduction in down payments
- Easing of FDI norms in the sector and the government focus on developing high-quality commercial real estate
- The introduction of the Real Estate Regulatory Authority to regulate the sector and dispute redressal has boosted the confidence of the NRIs.
- Like resident Indians, NRIs can claim benefits under Section 24 and Section 80C of the Income Tax Act.
Points to keep in mind for prospective NRI investors in Indian commercial properties
For an NRI, investment in commercial property in India is a lucrative option. But in the zeal for investment, you should not forget some basic guidelines that you need to follow before you jump into the fray. Let’s take a look at some of them.
Location of the property
This is among the most important determinants for selecting the property. The location of the property makes all the difference regarding price, rentals, supply and demand equations, bank loan terms and conditions, etc. Collect thorough information about the property location that you are eyeing. Check for the types of offices in the area and the kind of rents that current tenants are paying.
You must get this check done before investing. Every utility—like drainage, other civic amenities, and safety standards—should be in place. A property assessment executive should do the checking and confirm the standards.
If you are buying the entire property, obtain the no-due certificate from the seller. It means that the seller has cleared all the property dues to various civic departments.
Do Indian banks provide loans to NRIs for buying commercial property in India?
Yes, Indian banks do provide loans to NRIs for buying commercial property in India. The Reserve Bank of India (RBI) has permitted all the banks and Non-Banking Finance Companies (NBFCs) to provide such loans to NRI applicants. However, the terms and conditions would vary from financing company to financing company.
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