NRI Real Estate and Property Investment in India
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NRIs finding India a Hot Investment Destination
Saturday, August 16, 2008

There is a growing number of Indo-Canadians who are snapping up luxury residential properties in India. Some are flipping the homes for steep profits or using them as vacation residences. Others are treating them as lucrative rental properties. Non-resident Indians in the United States, United Kingdom and Middle East are also fuelling the trend which has arisen in the wake of legislative changes that have made it easier for so-called NRIs to buy property, but is not without controversy. Critics say this infusion of foreign cash has driven up the cost of housing, pricing some locals out of India's booming real-estate market which has been growing at an average rate of 30 per cent over the last two years. Some estimates peg its worth at about $15 billion (U.S.). Indian property developers are now allocating between 10 and 15 per cent of their inventories to NRIs and are aggressively wooing them from around the globe. Developers say the total NRI market is already worth between $5 billion and $10 billion with the top hot spots being Mumbai and New Delhi. Indo-Canadians - many of whom are Punjabi - are also showing a preference for more northern locales. Property companies are eager to tap the Indo-Canadian market because India is Canada's second-largest source for new immigrants.

Legislative changes in India have also streamlined the buying process. Not only has the government revamped the rules for foreign direct investment, it is offering expatriates more advantages .It introduced a "Person of Indian Origin Card" in 1999 and tweaked the program in 2002. The card gives former Indian citizens, along with eligible spouses and children, increased protections and rights. The PIO cardholders do not require a visa to enter the country or permission to work there. While there are still restrictions on acquiring agricultural land, residential properties are fair game. The Consulate General of India in Toronto has issued about 9,000 PIO cards to date, but Canada-wide figures are not available .PIO cards have helped Indian banks operating here arrange home financing loans. The State Bank of India - which has a Canadian subsidiary - says it is seeing a double-digit year-over-year increase in demand for its NRI home loan product.

That buying power has left groups like The Confederation of Real Estate Developers Association of India and the Maharashtra Chamber of Housing Industries salivating over potential profits. Both teamed up with the CineMaya Media Group Inc. to host the recent "Buy Indian Properties Expo 2008" in Toronto. Not all Indians, however, are applauding the infusion of foreign capital. "With investors across markets snooping around for new assets, Indian properties became the red hot blue chip... it has certainly priced out genuine home buyers from the market," The Economic Times argued in an opinion piece.

 

 

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