NRI's Optimistic about Indian Real Estate after Elections

Investors from the UAE are increasingly looking to put their money in India’s real estate in view of the country’s positive environment and long-term growth potential, a financial services company told Gulf News.

ASK Group, which earlier launched funds that are focused on residential real estate in India, has received encouraging response and is bullish to attract a large interest from investors, especially high networth clients, in the UAE.

The company focuses on institutional investments, such as fund of funds, sovereign funds, endowment funds and family offices, which are advisory firms that serve affluent households. It currently seeks to raise $200 million (Dh735 million) offshore fund to be able to invest in housing developments in India.

“Family offices currently are more proactive in participating in India growth story and we hope the process of institutional investors has begun. [We’ve] got encouraging response from family offices and could able to close more than 50 per cent of the fund from UAE currently,” said Sunil Rohokale, managing director and CEO of ASK Group.

Rohokale said both non-resident Indians and citizens in the UAE, including institutions and ultra high-net worth residents, are looking for diversification and are actively seeking India’s real estate as a “de-risking strategy”.

He said the introduction of real estate investment trusts (REITs) in India and regulations such as the Land Acquisition Bill and Real Estate Regulatory Bill, coupled with a stable currency and “healthy macro-financial numbers”, have helped renewed investor confidence. 

“Of late, we have seen many [Indian] developers coming to Dubai, setting up their offices and doing road shows to which investors have reacted positively because of currency gains. The property prices in India have bottomed out and in the past, many investors have made money in Indian real estate and hence are more comfortable,” Rohokale added.

ASK Group is a diversified financial services company that has been operating in India for over 30 years. Its asset management business covers equity, private equity and real estate private equity. The company considers UAE as a “very strategic market”.

Investors from the UAE are not just focused on real estate funds. Private wealth is spread across a wide range of vehicles, including mutual funds, traditional savings and long-term investment plans, among others.

A new survey commissioned by Standard Life suggested that investment flows from the UAE are likely to increase, with two thirds of NRIs saying they are optimistic that India will be more investor-friendly after the general elections.

Source: Gulf News

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General Elections 2014 - A Great Hope for Real Estate

As General Elections are the flavor of the season going in India, everybody has been speculating about Real Estate scenario post elections. This is the only time which will tell us whether real estate market will witness boom or bane or remain intact. Real Estate Professionals are unanimous on one prediction that things will start looking up for the sector only in the second half of 2014 when clarity on the new government will emerge and businesses start investing.

2013 was not a good phase for real estate, when all properties including residential, office and retail barring some cities such as Bangalore saw a steady decline in absorption. In 2014, situation might be changed as the general election of 2014 is anticipated to have positive bearing impact on real estate.

Scenarios after General Election: There can only be following 2 scenarios after general elections.

· Existing Government is re-elected

· New Government is elected

In both the scenarios there ought to be some changes in the existing market, both economic & financial. Of course the change would be more apparent changes in case the government is upturned. It is a known fact that Property market is highly affected by the health of economy & finance in the country.

Financial Impact: With a change in the politics, definitely there will be changes in the foreign investment policies of India and that will impact the way investments are made thereafter. Even if the Government remains intact, this market is in for changes. This is because; currently the policies are being formulated keeping in mind the vote-bank. Once the elections are over, policies will be reformulated and that will affect how investments are made in Real Estate.

Economic Impact: A change in politics will not have any direct or visible impact on the economic markets as it is controlled by an independent body, RBI. But yes, indirectly there will be a lot of effect here as economic policies have to be synchronized with financial markets. Any non-synchronization would lead to halted growth and inappropriate levels of inflation in the country.

Real estate will also get affected in this case also.

For those sitting on the barrier to purchase house or waiting to sell at a decent profit, the outcomes of this year’s general elections is expected to be a game changer. From the end-uses issue of view, it is probably the best time to purchase. One can aim on buying from resale market. As proposed earlier, there is powerful prospect that distress sales will increase and it presents end-users with an opportunity to purchase at lesser rates. However, buying in secondary market means, one has to pay huge money of property value in cash.

Reference URL: http://www.realthorizon.com/2013/11/effects-of-general-elections-2014-on.html

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The Trend of Townships - Buzzword in Indian Real Estate

There is new era of integrated township started in Indian Real Estate. This new phenomena has been catching the attention of real estate buyers who wish to receive basic needs like education, shopping infrastructure and health care in a single project. Let’s get insight of these self-sustained ventures and their popularity.

Township: No doubt, India has witnessed the tremendous growth in real estate as a result of urbanization and industrialization over the years. Even constant increase in population has been pushing enormous rise in demand for real estate and infrastructure. Of lately, the needs and priorities of people towards properties has been changed. Earlier real estate buyers used to satisfy with standalone properties but now they look for a package wonderful as a whole including luxurious branded residences along with high-end retail spaces and grand corporate suits. The concept of integrated township caters to such needs and brings the new wave of trend where a residential parcel is combined along with a commercial establishment, entertainment zone and corporate space.

The New Wave: The New Wave Townships are the future of residential real estate. Investors willing to park their money in township projects should look for the right combination of factors that will be useful for them. With the entry of private real estate developers, the Indian property sector is witnessing major changes and is prospering. Modern townships and other development projects by private players have revamped the realty sector. The country is witnessing a new phase of development that is not only restricted to metropolitans but is also spreading to tier II and tier III cities, although the real estate property of Bangalore has been witnessing maximum growth over the last few years.

The altering trends, growing needs, changing habits and the desire to rise socially – all these factors play a crucial role in deciding what a buyer opts for. Integrated townships not only offer awe-inspiring infrastructure with amenities galore but there are also provisions like schools, hospitals, gymnasiums, clubhouses, swimming pools and shopping complexes to uplift the residents’ standard of living. Townships also decrease the socio-economic divide among the occupants by presenting similar residential units and providing same facilities to all. People feel highly secure being residents of group housing societies that offer a healthy & progressive environment for occupants. Today many of renowned real estate developers like Sikka are coming up with this one-of –kind townships along with eco-friendly environment and vast open spaces.

Townships lure NRIs: Non Residential Indians have been increasingly giving back to their homeland. They consider it as a safe investment that gives them a sense of security. This trend has massively increased with the downfall of the Indian Rupee. NRIs are making most this opportunity and parking money in the Indian property market. NRIs are also drawn to the larger interest rates on Non-Resident External and Foreign Currency Non-Resident deposits. Foreign investors seeking to buy a unit in a township project must study all parameters in detail and should remember huge land parcels for townships are rarely available in the midst of the city. But that should not compel you to buy a house in a development that is far away and cut off from the main city. Potential investors who wish to become home owners in one of the residential units of a township can seek financial aid from banks. The Indian property sector is expected to expand to US$ 90 billion by the year 2015 and FDI is likely to grow six-fold to US$ 30 billion in the following decade, making Indian townships a haven for investment.  

Reference URL: http://realtybiznews.com/indian-real-estate-welcomes-the-trend-of-townships/98723816/

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Essential guide for NRIs investing in Indian real estate

In the aftermath of the Sub Prime crisis in the US and the sinking real estate segment in the EU nations, NRIs have been looking homewards for investing in real estate in past couple of years. Additionally the depreciation of the rupee in the last year has further fuelled the demand for real investment by NRIs in India. In some of the Middle East nations as well as places like Malaysia and Singapore the domicile restrictions are forcing NRIs working there to secure a home back in India when the going is good. But before investing in real estate in India the NRI must be clear about the actual benefits, the options available, the procedure involved and pitfalls that may accompany such a financial decision.

Why buy a House in India?

Currently there are several extremely compelling reasons for NRIs to buy a house in India:

•  The depreciated rupee presents an ideal situation for smart investment in Indian real estate.
•  The procedure has been greatly simplified for encouraging NRI investment in real estate. (Refer Foreign Exchange management (Acquisition and Transfer of Immovable Property in India) Regulations of 2000 and additions to this regulations vide RBI master circular No. 4/2012-13 dated 2/7/2012 applicable for Acquisition and Transfer of Immovable Property by NRI/Persons of Indian Origins.)
• Wonderful offers being floated by the CREDAI (Confederation of Real Estate Developers Association of India).
• Tax benefits that are especially applicable for NRIs investing in real estate in India.
• The inherent security of real estate investment that is offered by Indian markets.

      What can a NRI buy in Indian Real Estate?

The RBI and FEMA regulations have categorically specified the kinds of investment that is permitted for NRIs in the real estate segment. A NRI has the permission to carry out the following with regard to real estate in India:

• Acquire any immovable property other than agricultural land, plantation property and farm house in India.
•  Acquire any immovable property as described above by way of gift from a resident Indian, citizen of India residing outside or Person of Indian Origin.
• Acquire property by means of inheritance.
• Transfer by means of sale of immovable property described above by means of a sale to a person residing in India.
• Transfer agricultural property, plantation land or farm house by way of gift to Indian citizen who is residing in India.
• Transfer by way of gift residential or commercial property by means of gift to any person who is a citizen of India whether residing within or abroad or a Person of Indian Origin.

      What are the Financing Options?

As on today there are several financing options for NRIs looking to buy a house in India. The RBI has stipulated the following norms for NRIs to buy a house in India.

• The home loan amount for a NRI is restricted to a maximum of 80% of the cost and the balance has to borne directly by the NRI.
• The remittance of the down payment by the NRI can be made directly from the nation of current residence through normal banking channels such as the NRE/NRO account in India.
• The repayment of the principal as well as the interest amount to the financing agency must be done through similar channels only.

     What are the Tax Implications for NRIs Buying House in India?

The NRI will have to pay the stamp duty and the registration fee while purchasing but will have no additional tax due at the time of the purchase.

• He shall be able to avail the same benefits as resident Indians on the interest paid towards the house loan.
•  In case the property is leased then the tax procedure becomes slightly more complicated. The income received by this means shall be treated as ‘Income from Property’ and hence the standard slabs will be applicable with the standard deductions also. For NRIs residing in nations where worldwide income is taxable such as the US, the individual will have to pay the tax applicable in that country unless there is a Double Tax Avoidance Agreement with India.
• As a special benefit all amount paid towards the interest of the home loan repayment is deductible from the taxable income for NRI without any upper limit.
•  In case the NRI sells off the property he shall be liable for the capitals Gains Tax as applicable under the IT Act.

     What to watch out for when buying House in India?

While investing in real estate in India can be a smart move there are several pitfalls which one needs watching out for in order to secure the investments.

Property Title: The seller must have clear title of the property and the required authority to sell it especially in case of inherited house or a joint property.

•  NDC: There should be no outstanding civic authority dues or electricity/ water bills pending at the time of sale. A  No Due Certificate to this effect must be produced by the seller.
• Bank Release Letter: In case the property had been mortgaged for a loan or provided as a direct/indirect collateral security for any loan, then the seller must be able to provide a release letter from the concerned bank stating that all outstanding loans have been settled and the documents have been releases.
• Permits: The stated house must have all the required approvals and permits from concerned civic authorities with regard to construction and layout.
• ·      Litigation: The house under consideration must be verified for any kind of pending litigation.

How to get a safe deal?

The NRI may often find it quite daunting to decide on the right property while deciding to invest in a house in India. The traditional manner is to request friends, relatives and acquaintances to search for the right one. However currently there are many reputed real estate developers who are offering complete services in this regard for NRIs in order to attract investment. Many seminars and Expos are being organized in different parts of the world to woo NRI customers by these developers. One can avail their facilities and select the properties on offer. The reputed developers will usually offer a clear title and litigation free property though this might cost a bit more. These developers also have schemes to take care of the house in terms of maintenance as well as leasing post purchase.

A word of caution in this regard is that NRIs should not completely rely on such Expos and seminars that are held abroad to decide on buying the right house. The agents of the developers may at times provide incorrect and misleading information regarding the true value and prospects of the property that they try to sell. They might be trying to palm off projects that failed to take off in domestic market. Cross checking such claims with someone you trust back home in India can save many complications at a later stage. Careful research undertaken to select the right house to buy in India is the beginning of a really great investment idea for NRIs today.

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