Published on 21 January 2006 at 07:26 pm
Filed under: Asia:- India Property Guides » India Investment Real Estate Buying Guide
The real estate market in India is undoubtedly booming with local demand for housing and office space incredibly intense; but the market has to be considered as an emerging market by investors because the laws relating to foreign direct investment into the real estate market in India are so restrictive that profiting from India’s property sector is far from straightforward.
If you’ve read around this site you know that we always try and present a potential property investor with the buying process for each country we cover, but when it comes to how to buy investment real estate in India we do not have the definitive answer! We have however collated certain facts and figures that we hope will be of assistance to anyone hoping to enter the property market in India.
First things first there were well publicized changes made to the laws relating to foreign direct investment into the real estate sector back in February 2005 that now mean that non-resident Indians (more commonly referred to as NRIs) and Overseas Corporate Bodies (OCBs for short) can invest up to 100% in the housing sector.
Furthermore the aforementioned groups of people can also invest up to 100% in ventures relating to the construction and real estate industry. For a foreign company to be considered an Overseas Corporate Body and be eligible for direct real estate investment in India they have to have at least a 60% NRI holding.
The Government of India also has certain rules in place that allow foreign investors to purchase commercial property in India if that real estate is to be used by the company for business purposes.
The majority of projects where FDI is allowed have a tie in investment period of a minimum of 3 years to prevent speculative investing, but the good news for companies or NRIs wishing to get into the investment property market in India is that investing in smaller projects is now a real possibility. Before FDI was only allowed on projects on sites in excess of 100 acres, this has been reduced to 25 acres.
For individuals wishing to enter the property market in India the easiest way is to buy into an investment fund. The changes to the laws relating to FDI and also the real estate sector in general that were announced back in 2005 saw investment fund rules relaxed to the point where many experts believe a real estate investment trust (REIT) sector could now emerge. In the meantime there are a number of attractive and transparent funds available from reputable investment houses that allow individuals hassle free entry into the real estate market in India.
In terms of the state of the property market in India care must be taken when acquiring any land or real estate because the title deed registration process is not up to date and independent legal advice should be taken at every stage of the property buying process.
If anyone has a definitive guide to the property buying process in India for foreign investors or has anything they would like us to add to our seed-guide ‘How to Buy Investment Real Estate in India’, please .
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