Motivations for investing in indian real estate for NRIs
Feb 26 2012
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Here are some motivations for investing in Indian real estate for NRIs:
Returning to India in the future: Many NRI eventually want to return to India, so investment in property is the first step towards establishing an additional root in the place of your choice.
Investment opportunity: Indian real estate market is one of the hottest investment opportunities in the world. The rate of home ownership is relatively low India (with a significant upside potential), and combined with economic growth potential we are looking forward to a golden age of real estate growth in India.
Diversification: A typical NRI has eggs in many investment baskets to minimize the risk exposure of the financial investment. Given the downside risk facing the world economy (thus the prospect of a dismal return from other investments) it is a good idea to allocate a portion to Indian real estate market. This is more appropriate as we continue to see a decoupling of economic growth between the developed and emerging markets.
Renting benefit: Given the robust growth in the rental market in India, property investment in India has the benefit of monthly income that potentially grows over time. A healthy rental market also indicates a robust housing market, thus when you decide to sell your house you will enjoy capital gains on your investment. So buying a property to rent is like investing in fixed income securities with rising coupon and a final principal payment that is more than the face value.
The reduction of Cash Reserve Ratio (CRR) is expected to inject liquidity into a credit parched economy. This is expected to be the beginning of monetary easing.
Based on a study by PricewaterhouseCoopers (PwC), Bengaluru is the 10th best real estate investment destination for 2012 among the most favored real estate investment destinations in the Asia.