Bangalore drawing NRI investors in real estate

A growing number of NRIs across the US prefer to invest in real estate back home due to a combination of factors. The capital appreciation in India, competitive local lending rates in the US, easing of investment norms by the government, repatriation facilities and availability of property management services are primarily instrumental in driving them to investing in real estate here.

There are many in the US observing the real estate market here. The consistent price appreciation over the years is a major draw. It is this section of prospective investors who have all been waiting in the wings all along that are now keen to get a slice of the market pie here as the US market is yet to pick up. Moreover, expatriates who are looking for a short to medium-term appreciation on investments are now entering the real estate market here. Generating funds both locally and here is much easier now for them. Yet another significant factor is the ability to raise short-term funds at negligible interest rates in the US.

In a survey conducted recently during a property show held across the US – in Edison, Dallas and Sunnyvale CA – 25 percent of the NRI visitors in Edison opted for investments in Bangalore, while it was 40 percent in Dallas and 67 percent in the Bay area, California.

A significant number of NRIs in Dallas are keen on investing in leased commercial property for the rental income. Many techies in the Silicon Valley in the west coast are looking for investments in Bangalore. The employment opportunities and returns on investments here are driving them.

The Tier II cities such as Mysore and Mangalore are also drawing investors primarily for their developed plots as land appreciates much faster here. The predominant choice among US-based NRIs in Bangalore is apartments followed by developed plots, villas, penthouses and commercial property. Both retail and office space are preferred options as rental income is now repatriable.

The survey further reveals that while 44 percent of the visitors to the shows opted for home loans in Edison, 45 percent are keen in Dallas and 51 percent are evincing interest in the Bay area. They are keen to prepay the loan and do not want to stretch till the full repayment period.

A significant factor for the surge in investments is the proliferation of property management companies who are undertaking to manage the real estate assets of NRIs during their absence. Home loan processing facilities through online and representative offices spread across select countries further encourage NRIs to enter the market with minimal financial outlay.

Yet another factor for the growing level of interest in the real estate market here is the easing of investment norms over the years. Now, NRIs get almost all the privileges a resident has. The repatriation procedures have been considerably simplified with the apex bank decentralizing them. They can now repatriate the sale proceeds of up to two residential properties and commercial properties without restriction.

An amount of USD 1 million per year can be remitted outside India from a non-resident ordinary account (NRO). The authorized foreign exchange dealers themselves now handle repatriation on submission of a certificate from a chartered accountant that all local taxes, if any due, have been remitted. However, agricultural land, farmhouse and plantation properties are still restricted.

Source: Times Property, The Times of India, Bangalore