How to buy a house in India
NRIs, know how to buy a dream home in India
March 15 2006
IANS
"I would love to buy a house in India, no doubt.
But there are certain hiccups in doing so," said
Sudhir Chowdhary, a computer consultant from Chicago.
But why invest if there are problems? "My country,
my identity, my people and friends," he replied.
Of course, NRIs face many hurdles in buying property
in India despite the fact that they can remit money
in hard currency and every real estate agent lays
down the red carpet for them.
For a start, an NRI needs a lot of cash to buy a
property.
Sudhir wants to buy a home near New Delhi as he is
from Gurgaon in Haryana, which borders the capital.
But he needs around $180,000 for his dream home. He
finds the prices sky high and they are still climbing.
Now some banks offer mortgages to NRIs but this is
not the norm. Since he has to look for the future
of his immediate family in the US, he has to think
twice before investing.
A mechanical engineer in Dubai, Apit Shah also dreams
of buying a home for his parents to live comfortably.
He sends money regularly to his bank in Gujarat but
when will he save a tidy sum to buy a property?
Buying a home in India for some NRIs is a matter
of security as in the case of Indians in East Africa
who had bought homes in Britain since the 60s as they
were not sure when they would be kicked out of these
countries. They sent money by hawala to buy their
homes - just in case.
For other NRIs, it is a matter of convenience as
a large number of Indians from Britain and the US
have their second homes in India for the winter or
just to stay when they visit the country -- and save
on hotel expenses.
Three sisters who are settled in Kenya, the US and
Canada have jointly bought a flat in Chandigarh to
stay during their frequent visits.
Buying a home is also good investment for some NRIs
as property prices have been spiralling in India.
But the big breakthrough came last year.
Foreign real estate companies operating in India
and Indian real estate developers have been flooded
with requests after the Indian government allowed
foreign direct investment (FDI) in real estate.
FDI up to 100 percent is allowed under automatic
route in townships, housing, built-up infrastructure
and construction development projects. The last include
housing, commercial premises, hotels, resorts, hospitals,
educational institutions, recreational facilities,
city and regional level infrastructure.
Since land is scarce in major metros of New Delhi,
Mumbai, Chennai, Kolkata and Bangalore, there is a
shift to 'tier-two' cities and towns that can absorb
good quality accommodation. Real estate is growing
at a hefty 30 percent a year.
The past year has seen about a billion dollars invested,
according to one estimate. The next 18 to 30 months
will see an inflow of seven to eight billion dollars,
said the CEO of a top construction company.
Overall, India requires 10 million housing units
every year. So any investment in housing is bound
to get hefty returns estimated between 45 and 100
percent in new estates.
Estate developers have always been wooing NRIs and
have developed many estates - called 'colonies' in
India - specifically for NRIs with swanky names such
as Dollar Apartments, Windsor Manor or Bel Air Heights.
In these estates such is the ambience that one has
to keep reminding oneself that it is India and not
the West! NRIs have readily invested in these homes
for regular income from rent or for staying there
when in India.
Some towns are preferred such as Pune near Mumbai.
Now just three hours by car on the expressway, Pune
is bursting at its seams with new housing projects
for the well-heeled Indians and NRIs.
Another is a sleepy town in Punjab called Phagwara
near Jalandhar. Here property prices are the highest
in the state. A similar town near the border of Gujarat
and Maharastra was also in the news on this count.
Based on NRI demand, Kerala is famous for its high
property prices.
Prices of these luxury homes have rocketed by over
100 percent in many cases. With little chance of their
falling, property prices just 'firm up' for a short
period. Sure, a large sum of money is converted into
bricks and mortar when one buys a home and short-term
returns are lower than financial markets. But the
emotional factor of owning a home 'back home' is what
drives NRIs to invest in real estate.
