3. PARTICULARS
From the Editor
About Unesta Homes
About the Founders
Indian Real Estate Poised for Real Growth
The Road to Real Returns
Timing is the Key to Investment
Unesta’s Past Events
Hotspots for NRI Investment
Real Estate NRI FAQs
A Complete Home Loan Guide for NRI’s
Page No.
4
6
7
8
11
15
16-17
20-24
26 -28
29-30
Issue No.03 | Released : 2015 Edition
Editor : Saurabh Agarwal, India Homes
Contributor: Joieta Dutta – India Homes | Naveen Jain – India Homes | Siddhart Goel – Cushman & Wakefield India
Designed and Published by : Unesta Homes Limited
Free Publication. All the contents of URealty are only for general information and/or use. Such contents do not constitute advice and should
not be relied upon in making (or refraining from making) any decision. Any specific advice or replies to queries in any part of the magazine
is/are the personal opinion of such experts/consultants/persons and are not subscribed to by URealty Magazine.The information in URealty
Magazine is provided on an "AS IS" basis, and all warranties, expressed or implied of any kind, regarding any matter pertaining to any
information, advice or replies are disclaimed and excluded. To order reprints contact: Unesta Homes, 52 Brook Street, London W1K 5DS.
UK Office
Address:
52 Brook Street,
London, UK- W1K 5DS
Webiste: www.unesta.com
Tel: +44 (0)207 127 8447
General Enquiries: info@unesta.com
Marketing: marketing@unesta.com
Sales: uk.sales@unesta.com
www.twitter.com/unestarealty www.youtube.com/unestarealtywww.facebook.com/unestarealty
Dubai Office
Address:
Level 17, Office 1702,
The Fairmont Dubai,
PO Box 119774, Dubai, UAE
Tel: + 9714 311 6795
Email: dubai.sales@unesta.com
India Office
Address:
IndiaHomes
India World Technologies Pvt Ltd
Global Business Park, Tower D, 9th Floor
Gurgaon, Haryana-122002
Website: www.indiahomes.com
General Enquiries: info@indiahomes.com
Marketing: marketing@indiahomes.com
Offices
IN THIS ISSUE
4. from the editor
“Buy when no one is buying &
Sell when no one is selling”
– Warren Buffett[ ]
In the 3rd Edition of the URealty Magazine, we would like to revisit this mantra. A popular quote by Warren Buffett and just
apt for the current market scenario for India Real Estate.
The performance of an economy has a direct effect on the real estate market, something India has experienced all too well.
Last year, the economy battled against a weakened rupee, political uncertainty ahead of the general elections, and rising rates
of deficit and inflation. This lead to many developers slowing down plans to build, and many investors waiting to see what the
market would hold. However, the latter part of 2014 saw real estate activity pick up, and experts have projected that 2015 will
be a year of prosperity and growth where real estate is concerned.
In this issue, we examine in-depth the factors that have lead to the turn around, as well as what is expected in terms of GDP
and economic growth. We explore the potential of current and up-and-coming markets, consider the changes to regulations and
legislation, discover the government’s plans for “smart cities”, and analyse the supply and demand for properties in three of
India’s major cities. In addition to examining micro-markets, we also take a general look at what this year holds for India as a
whole, a country that is now predicted to have one of that fastest growing property markets in the world.
Within these pages lie facts, statistics, expert tips and buying advice, designed to help you make sense of the current state of
the market. We hope you enjoy this issue, and learn from it more about the potential real estate investment opportunities that
await NRIs in India.
Saurabh Agarwal
Editor
DISCLAIMER :
This publication is for the purposes of general information only. The views / opinions
expressed in this magazine do not necessarily reflect the views of either UNESTA Homes
Ltd. or IndiaHomes. The material in this magazine is not offered as advice and no liability is
assumed in relation thereto. UNESTA Homes Ltd. or IndiaHomes, their respective staff and the
contributors shall not be liable, for the consequences of any action taken or not taken as a result
of or, for any reliance placed on, any material published in this magazine. Every investment in
the property market inherently contains certain risks. Prospective investors may
therefore take appropriate financial/investment/legal advice prior to making any investments.
Neither UNESTA Homes Ltd. nor IndiaHomes accept any responsibility for the content of
any advertisement placed in this magazine. Readers may contact the person/entity placing the
advertisement for any details thereof.
While due care and diligence has been taken in the publication of this magazine,
UNESTA Homes Ltd. or IndiaHomes, their respective staff and the contributors shall not be
liable for any error which may have inadvertently crept in.
04
6. ABOUT UNESTA HOMES
UNESTA HOMES - The Joint Venture of
IndiaHomes.com and Unesta
India has historically posed a bunch of challenges to customers
looking to buy a little piece of paradise either as an investment
or as a retirement home for themselves or a loved one. The
challenges in Indian real estate abound, and while there is
a huge opportunity for appreciation and putting together an
enviable portfolio, there remain numerous challenges around
transparency, the ability of Indian developers to execute huge
projects within time and budget, and overall inability of NRI
customers to manage their properties when they are not on
site.
These days buying a property in India is slowly becoming
simpler than it used to be in the past. We have found that in
the last few years where the IndiaHomes Property Group has
been spearheading the transformation of Indian real estate, all
stakeholders, including the developers, brokers, customers
and most importantly the state governments have become far
more appreciative of the value of real estate and have focused
on allowing greater transparency, accountability and customer
service to become the norm.
In our partnership with Unesta, we have found a like-
minded friend. The vision of providing NRIs a one-stop shop
for all their property related investments in India, is a cherished
goal at both IndiaHomes and Unesta; we are committed to
ensuring that the Indian customer, no matter where they are in
the world, gets access to the best services and the most reliable
property in their journey to property ownership.
The recent joint venture partnership between the
IndiaHomesPropertyGroupandUnestaHomeswillensurethat
all major NRI hubs in America, London, Dubai and Singapore
have adequate representation in terms of infrastructure,
support and knowledge for Indians living anywhere in these
markets to be able to make an informed decision.
With over close to 100 million dollar investment over the
last 4 years, and offices and operations in 50 cities across India,
the IndiaHomes Property Group is perfectly placed to partner
with Unesta and create a unique proposition for customers
anywhere in the world to ensure their interests are protected.
“I take this opportunity to wish the team at Unesta all
the best, and also to promise customers that the IndiaHomes
Property Group stands behind our partner Unesta Homes in
supporting them in every possible way to ensure that they
provide great value and excellent service to their customers
in their exciting journey to owning Indian real estate.” Mr.
Samarjit Singh, India Homes.
“We couldn’t have found a better partner than India
Homes. In addition to being India’s No. 1 real estate advisory
company, the company also shares Unesta’s aspiration to
make the experience of buying property in India hassle free
for NRIs. Through this partnership we hope to offer a wide
variety of choice across different cities and leverage their
technology and processes needed to offer exceptional services
throughout the transaction cycle of a property.”, Mr. Goyal,
Unesta Homes. This marks a new beginning of India Real
Estate business in the international markets.
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7. EALTYYOUR REALTY
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about the founders
Mr. Vikram Goyal
CEO, Unesta Homes Ltd.
Mr. Samarjit Singh
MD & Group CEO, IndiaHomes
Property Group
With 16 years of multi-dimensional experience, Mr.
Samarjit Singh is the Managing Director and Group CEO-
The IndiaHomes Property Group, India’s No.1 Property
Advisory Company.
He is a graduate of the prestigious St. Stephens College
in Delhi and post graduate of the UC Berkeley, USA.
Previously, he was the Founder and Managing Director of
Candid Marketing, India's number one Marketing Services
Company as ranked by the Economic Times Brand Equity
Agency Ranking 2010, Samar has also served on the Board
of the Entrepreneurs Organisation (EO) for 7 years and
served as the President of Board of EO New Delhi in 2007.
In partnership withAmit Burman (Vice Chairman of the
Dabur Group), he has also co-authored the book, “Winning
in India”, a widely regarded compilation of the winning
insights of some of the very successful business leaders of
India.
Mr. Vikram Goyal is the CEO of Unesta Homes Ltd (a JV
between IndiaHomes and Unesta) and has been at the top of
the Indian real estate sector catering to the NRI community,
for the past 10 years. As Head of Business Development,
Vikram is the visionary of the company, looking ahead at
trends and key investment opportunities in India.
Vikram has launched a number of successful brands
onto the international stage whilst operating from London,
after his emigration in 2005.
A dynamic and keen entrepreneur, Vikram knows what
it takes to draw NRIs to invest in properties- transparency and
exceptional customer service. His London-based company
offered that combination when it ventured in the international
market four years ago and continues to do so even today. In
fact, Unesta is considered as the leading property advisory
company in the UK and European markets for Indian real
estate. With key investment in brand building and marketing,
Unesta has become a pioneer in offering unique investment
products in Indian real estate to high net-worth clients.
07
8. INDIAN REAL ESTATE
POISED FOR REAL GROWTH
2015 is set to be a year of substantial growth for India.
With a new government has come a renewed interest and confidence in the property market, as economic conditions are set to
stabilize, and growth in terms of both rates of construction and prices is expected. Along with many other countries affected by the
recession of 2009, India is finally starting to gain momentum and show signs of recovery. The GDP for Q1 2014/15 was reported at
5.7 per cent, up from 4.6 per cent the prior quarter. Looking ahead to the rest of the year, The World Bank predicts a GDP growth
rate of 6.4 per cent overall for 2015, with economists anticipating that India’s economy could overtake that of the UK by 2020.
There were already substantial strides made in 2014, with rates of Foreign Direct Investment (FDI) also on the up. The rate of FDI
in India rose by 52 per cent in the first half of 2014, and private equity investments were also on the rise.
With all of this anticipated growth overall come heightened expectations that the property market will follow suit. So is this in fact
the case?
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Since taking office, the Prime Minister
has already engaged in meetings with world
leaders to increase the amount of foreign
investment in India, by removing common
roadblocks such as VISA issues. The pledge to
build 100 'smart' cities throughout the country
has also led to a boom in housing starts,
along with investment into infrastructure and
transit connections already underway. Aside
from the creation of jobs, these investments
contribute to the local economies by boosting
the demand for housing in well-connected
areas, prompting developers to rise to the
occasion and build new properties throughout
the country. Inventory rates went up last year,
but the rate of sales saw a decline, something
largely attributed to investors awaiting the
results of the general election. With PM Modi
in charge and the Reserve Bank of India set to
reduce interest rates for borrowing, the rate of
sales is expected to pick up throughout 2015.
With the risk of inflation all but subsided,
property prices set to rise and interest rates
projected to be lowered, many investors are
now regaining confidence in India’s real estate
market – and with good reason. India may have
been dubbed an emerging market for some
time now, but with 2015, it looks as though the
time has come to finally fulfill expectations as
a prosperous, emerging market on the global
stage.
WHAT’S IN
STORE FOR
INDIA’S
REAL ESTATE
SECTOR?
The appointment of Prime
Minister Narendra Modi’s National
Democratic Alliance is a welcome
piece of good news for property
investors.
(UNCTAD) has placed India in
the top 5 prospective investment
destinations for 2014-2016.
TOP PROSPECTIVE INVESTMENT
DESTINATIONS FOR 2014-16
(x) = 2013 ranking
Developed economies
Developing and
transition economies
Source: UNCTAD World
Investment Report 2014
Note: Percentage of
respondents selecting
economy as a top destination
1 China (1)
2 United States (2)
3 Indonesia (4)
4 India (3)
5 Brazil (5)
6 Germany (6)
7 United Kingdom (9)
8 Thailand (8)
9 Vietnam (11)
10 Russian Federation (11)
10 Australia (13)
12 France (16)
13 Poland (14)
13 Mexico (7)
15 Malaysia (16)
15 Japan (10)
17 Singapore (22)
0 5 10 15 20 25 30 35 40 45 50
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11. EALTYYOUR REALTY
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THE ROAD TO REAL
RETURNS
As a real estate investor, having a strong working
knowledge of the real estate cycle will help you
maximise the returns on your investment.
As it the case with most financial markets, the real estate market is cyclical in nature. It follows a distinct pattern of phases, some
of which make it preferable to buy, others to sell, and some in which it is best to hold on to your property. When it comes to
making the most of out your investment, identifying and understanding the rudimentary principles of each stage of the property
cycle is key.
WHEN IS THE RIGHT TIME TO BUY?
There are generally considered to be three phases of the real estate cycle – boom, slump, and recovery. These were outlined over
80 years ago by economist and real estate expert Homer Hoyt, but they are just as applicable to modern markets today. If you
are an investor looking to buy-and-hold over the long term, garnering knowledge of these three phases will help you succeed
wherever you decide to buy:
11
12. Boom Phase
When a property market is experiencing a “boom”, it is undergoing a period of fast growth in terms of property prices. When
market conditions are favourable (low entry price points, excellent infrastructure and local employment, low interest rates,
etc.), property investors see an opportunity to “buy low and sell high”. As such, the market is often saturated and properties are
snapped up quickly, which in and of itself can drive property prices upwards as the competition grows. The boom phase often
tends to be the shortest of the real estate cycle, because it is the least sustainable. As more and more buyers enter the market,
more developers construct new units. As the average price rises in the area, it can often mean many of these units are left vacant,
resulting in an excess of supply.
Slump Phase
The market “slumps” when the supply outstrips the demand. When there are more properties than there is demand, it can result
in rental prices going down and vacancy rates going up, meaning income properties may no longer cash flow and actually cost
an investor money. Homeowners can experience similar struggles if they overleveraged themselves during the boom phase, and
have consequently been left with a property they cannot afford. Many homeowners and investors will then sell during the slump
phase, often for less than they paid when they purchased during the boom. Before the market recovers, it must first stabilize.
This means that prices will stay roughly in the same region, and interest rates will remain stagnant in order to correct the market
economy. Once the market is stable, it can then prepare to experience an upturn.
Recovery Phase
Unlike the boom phase, a time of rapid and high-paced growth, the recovery phase is a slow but positive process. During the
recovery, property to both buy and rent becomes more affordable, and so vacancy rates tend to fall. As people move back into the
area and stimulate the local economy, there is again more demand for accommodation in the neighborhood. This has a positive
impact on property prices, which means investors are drawn to the area and the rate of sales also increases.
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SOME THINGS TO CONSIDER
Economists generally submit that the entire real estate cycle takes around five to ten years, and so investors in the market for the
long haul should be especially aware of the different phases. That is not to say that you must only buy during a recovery and sell
during a boom. At any stage of the property cycle, an astute investor can potentially receive high returns on investment, and a
large part of that falls to doing extensive research about the market s/he is entering.
INDIA REAL ESTATE CYCLE
When looking at Indian markets specifically, it can be seen that this cycle is somewhat faster, as the markets have experienced
volatility in recent years. There have been many contributing factors that have seen major markets such as Mumbai, NCR,
Bengaluru and Chennai experience intense periods of boom and bust, such as the weakening of the rupee, uncertain buyer
sentiment, inflation and political instability. The India Knight Frank Research Report 2014 revealed that 2012 was a “boom”
period, but that the residential property market dissolved into a “slump” in the first half of 2014. This slump continued throughout
the better part of 2014, but experts believe that is set to turn around in the upcoming year. In fact, the volume of sales in India’s
six major markets is expected to soar, especially in larger, more consistent tier-1 markets.
For investors savvy enough to seek out great deals and negotiate attractive prices, bearing in mind the principles of the
property cycle will ultimately help them build outstanding portfolios with property acquired in 2015.
Launches and Absorption (Top Six Cities)
222,000
200,000
180,000
160,000
140,000
120,000
100,000
Note: Source:The top six cities are Mumbai, NCR, Bengaluru, Pune, Chennai and Hyderabad | Knight Frank Research
LAUNCHES
ABSORPTION
H12012
H22012
H12013
H22013
H12014
H22014E
Numberofunits
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15. EALTYYOUR REALTY
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TIMING IS THE KEY TO
INVESTMENT
You’ve heard it's said that “timing is everything”, and
it is definitely a key component to success in the real
estate market.
Making a judgment call regarding when it is the right time to enter a market is a key part of successful property investment, and
so it shouldn’t be left up to guesswork. There are a number of factors to take into consideration, and both reports on a market’s
past performance along with economic forecasts for the future can help make sense of these factors. 2014 saw many investors
hedging their bets on the future of India’s real estate market, but the formation of a new government saw many deciding that it
was in fact the right time to snap up a property. Market analysts were in agreement; the FTSE 100 index listed India as the best
place to invest in 2014. Looking ahead to this year, it can be seen that 2015 is set to offer even more investors as the tide begins
to turn for India’s economic climate.
15
16. 16
A property exhibition in Wembley, London – India U-Realty Show
– will showcase properties from India to prospective NRI buyers in
London. The show comes at a time when many in the NRI community
look to invest in properties in Indian cities, as the UK property market
looks gloomy.
As many as 20 well-known Indian property developers including
Godrej Properties, Rustomjee, Omkar Group, Total Environment,
G Corp, Adani, Wadhwa, Ansal API, ABIL and Jaypee Greens will
showcase their residential, commercial and retail real estate portfolios
to prospective London Indians at the two-day property show on
October 6 and 7, 2012 in Wembley.
India’s top Developers participated
at the Show
The NRI visitors at the URealty India
Property Show
Special Investment Seminars held at
the Show
URealty Magazine 2012 Edition being launched at the event Sewa Day 2012 celebrated at URealty Property Show
Wembley, London, October 2012
17. EALTYYOUR REALTY
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India Real Estate 2013 – Risk, Returns & Reforms.
Unesta brought together a global panel of prominent business
leaders at a packed event, which educated potential investors
and the general public on real estate investment opportunities in
India. The URealty Leadership Programme focusing on Indian Real
Estate 2013 – Risk, Return & Reforms took place at The MayFair
Hotel, London, on February 7th, 2013 and included over a hundred
potential investors discussing the challenges and opportunities that
Indian real estate presents.
International property consultants Cushman & Wakefield, leading
banking provider State Bank of India, global accountancy firm KPMG
and prominent developers Experion from Delhi NCR and G-Corp
Estates from Bangalore joined with Unesta to provide a platform for
NRIs (Non-resident Indians) and PIOs (Persons of Indian origin) to
share their thoughts on investing in Indian real estate.
With dignitaries including Lord Dholakia, Deputy Leader of the
Liberal Democrats in the House of Lords and Dr. Mohan Kaul, Co-
Chair Commonwealth Business Council, the URealty Leadership
Programme brought together eminent Speakers from Banking, Legal
and Taxation industry including Mr. MrutyunjayMahapatra, Regional
Head of the State Bank of India in the UK and Mr. Vijay Goel, Partner,
Singhania& Co. LLP.
LEADERSHIP
PROGRAMME 2013
The panel of leading Property Developers, Bankers and
experts in Legal and Taxation from India and the UK at
the URealty Leadership Programme
Guests at the reception of the URealty
Leadership Programme at The Mayfair Hotel Guests at the seminar at Mayfair Hotel
UNESTA’S PAST EVENTS
18. WHY 2015 IS THE
RIGHT TIME TO
INVEST IN INDIA
After experiencing a turbulent two years, the
residential real estate market is finally set to turn
around, according to experts.
Executive Chairman of Cushman and
Wakefield Carlo Barel di Sant’Albano recently
named India as a top market in which investors can
expect to see growth with a long-term investment
over 5-20 years. There are four primary reasons
why analysts are projecting such rapid growth –
urbanisation, the growth of India’s middle class,
the country’s young demographic, and a rise in
demand for property.
Urbanisation has already contributed to
strong growth in India’s eight major markets,
and it is expected to do so further as more people
move to the cities. A study as per United Nations
estimates that by 2050, 843 million people will be
living in cities, a growth rate of 42 per cent over
the next forty years. Currently, 590 million people
live in cities, a figure almost double that of the US
general population! India’s rising middle class is also gaining
more purchasing power; with the new government in place,
interest rates are expected to be lowered this year, making
borrowing a more affordable and attractive option. Along with
better access to credit, the middle class is also experiencing
an increase in annual income, and a high savings-to-spending
ratio. It is estimated that by 2050, 91 million households will
be deemed middle class, meaning there will be substantial
pressure applied on developers and investors to have properties
available near to economic hubs and areas of employment.
The young make-up of India’s demographic is also good
news for investors. By 2020 it is predicted that the average age
in India will be 29, meaning Generation Y will be firmly in
control. This is a generation known for being aspirational and
consumer-driven, meaning they are more likely to spend more
on rent to live in desirable areas/neighborhoods near work,
and to want to purchase homes for themselves in the future.
Perhaps one of the key reasons that now is the time to buy in
India is the rise in demand. Young people and families moving
for work need accommodation, international travellers require
short-term lets for business travel, and investors are returning
to the market looking to bulk up their portfolios.
According to figures from Cushman & Wakefield, an
estimated18percentofthedemandinIndiawillbeconcentrated
across the top eight major markets, and projections also
outlined that there will be a demand for roughly 13 million
units in urban areas by 2018.
TIMING IS THE KEY TO INVESTMENT
IN SUMMARY:
As the middle class grows and NRI investors reconsider India, now is the time to buy to experience the highest price
growth.
According to all major economic forecasts, India’s GDP is set to rise in the coming years, with immediate growth
expected in 2015. For buyers looking to enter the market at a time of economic stability, and to hold onto investments
over the long term to experience maximum price appreciation, rental yields and demand, there’s simply no time like
the present to invest in India.
18
20. As Prime Minister Narendra Modi assumed the position of
Prime Minister last year, many market spectators are now
examining the effects of his time as the former chief minister
of Gujarat.
One key area in which many are noticing an improvement
isGujarat’s realestatemarket,specificallythatofthecapitalcity
Ahmedabad. Many are attributing the improved infrastructure,
developments and transit links to Modi, all factors that have
had an undeniable effect on the property market. There have
been many improvements to the public groundwork along with
developments in industry and employment that have radically
changed the face of the commercial capital in recent months.
The city now has reliable supplies of electricity and
water, something that has helped buoy employment in the area
substantially.Transit has been improved, betteringconnectivity,
and the manufacturing sector has seen massive growth and
development. Ahmedabad is also expected to be a crucial link
in the upcoming Delhi Mumbai Industrial Corridor (DMIC),
something that will also create more jobs and therefore a higher
demand for housing in the area. It is this increase in demand
that has seen investors and developers rise to the challenge of
providing the supply. As Gujarat has gentrified and attracted
more residents to the city, the residential real estate market has
seen the benefit. In fact, results published in Residex, released
by the National Housing Bank, show that Ahmedabad property
prices have seen the highest pace of growth over the past four
quarters than any other Indian city.
Experts believe that positive market sentiment, faith in
political stability brought by Modi’s appointment, and the
growth of local industrial and manufacturing sectors have all
played significant parts in helping Ahmedabad find it’s feet as
an emerging destination for property investment.
HOTSPOTS FOR
NRI INVESTMENT
-AHMEDABAD
PM Modi’s
effect on the
Ahmedabad
real estate
market
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Call 020 7127 0617 or visit www.unesta.com
22. Thane has in recent years been
rejuvenated from industrial town to a
cosmopolitan city, largely thanks to the
growth of the IT sector in the area. The
sustained injection of funds from Thane
Municipal Council has improved transit
and infrastructure substantially over the
past twenty years, bettering connectivity
and trade with nearby Mumbai. The
growth of the IT/ITeS sectors called
for new commercial buildings to be
developed, and as more people began
to utilise the new transit links to travel
into Thane for work, the demand grew
for housing in the area. Developers such
as Rustomjee, DLF and Hiranandani
Developers among others have since
focused on building high-rise residential
units and townships throughout Thane to
house the ever-growing local workforce.
The area of Ghodbunder Road especially
has seen a great deal of development and
growth, owing to its excellent connection
to Mumbai’s Eastern Express Highway
(EEH) and Western Express Highway
(WEH).
In addition to better transportation,
Thane is now also home to educational
institutions, retail outlets, leisure
facilities, entertainment venues,
hospitals and schools. This bustling
city is expected to provide a high return
on investment for buyers looking to
purchase a property in the area, with
Jones Lang LaSalle India predicting
that capital values and rental rates will
rise by nearly 50 per cent by 2020. This
strong performance in the residential
real estate sector is set to endure as
more improvements to infrastructure
and commercial buildings/facilities take
place.
IT @ HEART OF THANE’S
RECENT RE-BIRTH
When looking at cities in India that have undergone
a substantial transformation in recent years, perhaps
nothing stands out quite like Thane.
Situated to the north-east of Mumbai,
Thane was the host to India’s first ever train
connectivity route. Thane has undergone
a makeover from being an industrial town
with affordable residential housing to a
now-favoured IT and relatively upmarket
residential destination. Various infrastructural
initiatives by the government executed under
the aegis of the nodal development authority,
Thane Municipal Corporation (TMC), have
greatly enhanced the connectivity of Thane
to the prime business hubs of Mumbai and
Navi Mumbai.
MUMBAI
THANE
22
24. The two main clusters in New Gurgaon along the upcoming
Dwarka-Gurgaon Expressway are Sectors 102 to 113 and
Sectors 76 to 95. New Gurgoan is well connected with three
highways, NH8, Kundli–Manesar–Palwal Expressway and
Dwarka-Gurgaon Expressway, Railway Station and the
Airport.
This so-called micro-market is receiving a great deal
of interest from prospective buyers, and is one area that
expertshavenotedispoisedforsubstantialpricegrowthand
property development, along with the Dwarka Expressway
Corridor. The building of over 44,000 residential units has
got underway, and those that have been completed and
have made it onto the market have already experienced
substantial positive price growth. According to figures
released by research firm PropEquity, prices of residential
apartments have grown from Rs 1,825/sq ft to roughly Rs
4,983/sq ft in the past five years, rising a staggering 173 per
cent. Units that are still under construction are expected to
be ready for residents within the next three years.
So just what is driving New Gurgaon? Aside
from excellent connectivity through roads and transit, further expansion of infrastructure, economic hot spots, employment
opportunities, along with an increase in the construction of commercial office space is propping up the demand for both short-
term and long-term accommodation in the area. As New Gurgaon becomes a key destination for business travellers, short-term
lets are increasing in demand too, something reflected in the development of hotels in the area. That New Gurgaon is not
restricted in terms of borders or the physical capacity for growth is also proving beneficial, as developers can build high-rise
projects along with houses and plenty of commercial buildings to cater to the anticipated influx of residents.
With a mix of both affordable and premium listings available in the area, the New Gurgaon corridor has something for any
investor looking to buy here, irrespective of price point. And with sizable growth and development in the area already underway,
these residential units are expected to provide a high ROI to investors that are ready to buy.
NEW GURGAON – THE
RISING STAR OF DELHI NCR
Situated beyond
the second toll
plaza of the NH-
8, the area now
known as “New
Gurgaon” is proving
popular with end-
users and property
investors alike.
24
25. EALTYYOUR REALTY
Own Your Nest in India EALTYYOUR REALTY
Own Your Nest in India 25
Call 020 7127 0617 or visit www.unesta.com
26. Q1. Why invest in property in India?
Ans: To tap the potential of the Indian real estate market
and expedite the sector with a double digit growth rate, the
developers have shifted their focus to offer timely possession
of projects and adapt to the new FDI rules.
The economic contribution of the real estate sector is most
likely to increase significantly during the period, from 6.3% in
2013 to almost 13% in 2025. This spiral growth is attributed
to the intensive demand for first-rated projects that can be
delivered on time.
During H1 2014, prices in Bengaluru have appreciated at the
fastest pace of 11%, compared to H1 2013. Mumbai, currently
suffering a downfall of 49% is expected to recover the sales
volume by the end of FY 2014. As real estate demand in India
improves, capital values in other major cities are also likely
to increase, albeit marginally. Purchasing a property in India,
thus, stands as a top priority for a non-resident Indian (NRI).
The purchase transaction is governed by the Reserve Bank of
India (RBI) and the rules and regulations that fall under the
purview of the Foreign Exchange Management Act (FEMA).
Q2. Can an NRI/PIO acquire agricultural land/plantation
property/farm house in India?
Ans: Potentially; doing so requires specific approval of Reserve
Bank of India, and the proposals are considered in consultation
with the Government of India.
Q3. What is the Tax treatment for income generated
from property selling or renting for NRI/ PIO/OCI?
Ans: The mere acquisition of property does not attract income
tax. However, any income accruing from the ownership of it,
in the form of rent (if it is let out)/annual value of the house (it
is not let out and it is not the only residential property owned
by that person in India) and/or capital gains (short term or long
term) arising on the sale of this house or part thereof is taxable
in the hands of the owner.
Q4. Does Capital Gains Tax (CGT) apply for NRI/PIO/OCI?
Ans: Yes. Long-term and short-term capital gains are taxable
in the hands of non-residents.
Q5. Do NRI/PIO have to file returns in India for their
property rental income and Capital Gains Tax?
Ans: The Government of India has granted general permission
for NRI/PIO/OCI to buy property in India and they do not
have to pay any taxes even while acquiring property in India.
However, taxes have to be paid if they are selling this property.
Rental income earned is taxable in India and they will have
to obtain a PAN and file return of income if they have rented
this property. On sale of the property, the profit on sale shall
be subject to 9 capital gains. If they have held the Property for
less than or equal to 3 years after taking actual possession, then
the gains would be short term capital gains, which are to be
included in their total income as tax as per the normal slab rates
shall be payable and if the property has been held for more then
3 years then the resultant gain would be long term capital gains
subject to 20% tax plus applicable cess.
Rate of tax deduction at source (TDS):
Long term: 20.6%
Short term: 30.9%
Q6. Is there a way for exempting the tax upon income
generated by the property located in India? How does
the Double Taxation Avoidance Agreement work in the
context of tax on income and Capital Gains tax paid in
India by NRI?
Ans: Exemption available (only for long term capital gains).
The long term capital gains arising on sale of a residential house
can be invested in buying/constructing another residential
house, within the prescribed time. The exemption is restricted
to the amount of capital gains or the amount invested in new
residential house, whichever is lower.
Real Estate
NRI FAQs
26
27. EALTYYOUR REALTY
Own Your Nest in India EALTYYOUR REALTY
Own Your Nest in India
If the amount of capital gains is invested in bonds of National
Highways Authority of India (NHAI) or Rural Electrification
Corporation, then the entire capital gain is exempted, else
only the proportionate gain is exempted. As per the financial
budget 2007-08, a cap of Rs. 50 Lakhs has been imposed on
investment that can be made in capital tax saving bonds.
India has DTAA’s with several countries which give a favorable
tax treatment in respect of certain heads of income. However,
in case of sale of immovable property, the DTAA with most
countries provide that the capital gains will be taxed in the
country where the immovable property is situated. Hence, the
non-resident will be subject to tax in India on the capital gains
which arise on the sale of immovable property in India. Letting
of immovable property in India would be taxed under most tax
treaties in view of the fact that the property is situated in India.
Q7. How does Double Taxation Avoidance Agreement
work in the context of CGT paid in India for the foreign
tax treatment?
Ans: In case the non-resident pays any tax on capital gains
arising in India, he would normally be able to obtain a tax credit
in respect of the taxes paid in India in the home country, because
the income in India would also be included in the country of
tax residence. The amount of the tax credit as also the basis of
computing the tax credit that can be claimed are specified in
the respective country’s DTAA and is also dependent on the
laws of the home country where the tax payer is a tax resident.
Q8. What’s the best way to file tax returns?
Ans: Traditionally, you could file your return either by giving
a power of attorney to someone in India, or by sending your
form and documents to a tax expert in India who would then
file returns on your behalf.
However nowadays, the easiest option for NRIs to file their
Indian tax returns is by using the online platform. There are
several options to file online.
Q9. What are the rules governing the repatriation of the
proceeds of sale of immovable properties by NRI/PIO as
prescribed by the Reserve Bank of India?
Ans: (a) If the property was acquired out of foreign exchange
sources, i.e. remitted through normal banking channels/
by debit to NRE/FCNR
(b) account, the amount to be repatriated should not
exceed the amount paid for the property:
(i) In foreign exchange received through normal
banking channel or
(ii) By debit to NRE account (foreign currency
equivalent, as on the date of payment) or debit to
FCNR (B) account.
Repatriation of sale proceeds of residential property purchased
by NRI’s/PIO’s out of foreign exchange is restricted to not
more than two such properties. Capital gains, if any, may be
credited to the NRO account from where the NRI’s/PIO’s may
repatriate an account up to USD one million, per financial year,
as discussed below.
If the property was acquired out of Rupee sources, NRI/PIO
may remit an amount up to USD one million, per financial
year, out of the balances held in the NRO account (inclusive
of sale proceeds of assets acquired by way of inheritance or
settlement), for all the bonafide purposes to the satisfaction of
the Authorized Dealer bank and subject to tax compliance. The
NRI/PIO may use this facility to remit capital gains, where the
acquisition of the subject property was made by funds sourced
by remittance through normal banking channels/by debit to
NRE/FCNR(B) account.
Q10. Is the rental income from property repatriable and
what are the RBI rules?
Ans: The rental income, being a current account transaction,
is repatriable, subject to the appropriate deduction of tax and
the certification thereof by a Chartered Accountant in practice.
Repatriation of sale proceeds is subject to certain conditions.
The amount of repatriation cannot exceed the amount paid for
acquisition of the immovable property in foreign exchange.
Q11. Are NRI/PIO/OCI eligible for Housing loans to buy
property from any Indian Bank?
Ans: An authorised dealer or a housing finance institution in
India approved by the National Housing Bank may provide
housing loan to a non-resident Indian or a person of Indian
origin residing outside India. A maximum of 80% amount is
financed by the financial institution. The rest has to be given
by the NRI.
For acquiring a residential property in India, the buyer is
subject to the following conditions, namely:
(a) The quantum of loans, margin money and the period
of repayment shall be at par with those applicable to
housing finance provided to a person residing in India.
(b) The loan amount shall not be credited to Non-
resident External (NRE)/Foreign Currency Non-resident
(FCNR)/Non-resident non-repatriable (NRNR) account
of the borrower.
(c) The loan shall be fully secured by an equitable
mortgage by deposit of title deal for the property
proposed to be acquired, and if necessary, also be lien on
the borrower’s other assets in India.
(d) The instalment of loan, interest and other charges, if
any, shall be paid by the borrower by remittances from
outside India through normal banking channels or out
of funds in his Non-resident External (NRE)/Foreign
Currency Non-resident (FCNR)/Non-resident Non-
repatriable (NRNR)/Non-resident Ordinary (NRO)/non-
resident Special Rupee (NRSR) account in India, or
out of rental income derived from renting out the
property acquired by utilization of the loan or by any
relative of the borrower in India by crediting the
borrower’s loan account through the bank account of
such relative (The word ‘relative’ means ‘relative’ as
27
28. defined in section 6 of the Companies Act, 1956.)
(e) The rate of interest on the loan shall conform to the
directives issued by the Reserve Bank of India or, as the
case may be, the National Housing Bank.
Q12. What documents are required to buy a property
in India?
Ans: The following documents are required for buying a
property in India:
a) Pan card (Permanent account number)
b) OCI/PIO card (In case of OCI/PIO)
c) Passport (In case of NRI)
d) Passport size photographs
e) Address proof
Q13. What documents are required for a home loan?
Ans: For salaried individuals, the following documents are
required:
a) Copy of employment contract
b) Latest Salary slip
c) Latest work permit
d) Bank statement for 4 months or NRE/NRO a/c 6
months statement
e) Passport/visa copy
f) Utility bill for address proof
g) PIO/OCI card
h) Power of Attorney (if applicable, in respective
bank’s format)
i) Customer credit check report
j) Property agreement duly registered or other related
docs
k) Income Tax returns last 2 years
For self-employed, the following documents are required.
a) Balance sheets and P&L a/c of the company for last
3 years
b) Bank a/c statements for the last 6 months for
company and individual, both
c) Income tax returns (3 years)
d) Passport/visa copy
e) Utility bill for address proof
f) PIO/OCI card
g) Power of Attorney (if applicable, in respective
bank’s format)
h) Credit check report
i) Property agreement or other related docs
Q14. Are there any restrictions upon the number of
properties bought by NRI/PIO/OCI?
Ans: There are no restrictions on the number of properties that
can be bought.
Q15. Is there any specific way of payment for buying/
acquisition of immovable property by NRI/PIO ?
Ans: There are multiple ways as mentioned below:
• Funds received in India through normal banking
channels by way of inward remittance from any
place outside India
• Funds held in any non-resident account maintained
in accordance with the provisions of the Act and the
regulations made by the Reserve Bank
• No payment of the purchase price for acquisition of
immovable property shall be made either
by traveler’s cheque or by foreign currency notes or
by other mode other than those specifically permitted
as above
Q16. What are the key points to be considered at the
time of purchase?
Ans: Investment in real estate is a simple but long-term move
so, one should be cautious enough at the time of purchase to
secure the deal.
Few points of consideration are mentioned below:
• Property Title: The title of property should be clear
from the issues and the seller should have the
required right to sell it, especially if it is inherited or
any joint property
• NDC: Always check that there will be no
outstanding electricity/water bills or any other
authority dues pending with the property. Take a no
dues certificate from the seller at the time of purchase
• Bank release letter: It is advisable to take the bank
release letter from the concerned bank, if the property
had been mortgaged as security in any type of loan
• Permits: The property for sale should have all
approvals and permits from the civic authorities in terms
of construction
Q17. What are the key points that ensure a safe deal to
buy a property in India?
Ans: Below are the key safety measures to be considered while
buying a property:
• Whenever you plan to invest in real estate, you
should go through the proper channels, either through
a Reliable Broking Firm, friend or relative to ensure the
authenticity of the property
• You can also approach through property expos
and seminars to choose a right property and select
reputed developer
• It will be wise to get the title papers of the property
verified by a lawyer before going ahead
• If and when you want to purchase /dispose the
property, you can give Power of Attorney to a reliable
person who is resident in India & who may be able to act
on your behalf to complete formalities such
as registration, possession, execution of the agreement of
sale,etc.
28
29. EALTYYOUR REALTY
Own Your Nest in India EALTYYOUR REALTY
Own Your Nest in India
A COMPLETE HOME LOAN
GUIDE FOR NRI’S
Buying a home for an NRI has always been a big challenge,
especially identifying the right property sitting thousands of
miles away. In addition to that, the availability of the right
information has almost been impossible, unless s/he is visiting
India and has enough time to investigate, identify and shortlist
a property during the short stay.
Traditionally, NRIs have relied mostly on friends, family
and relatives get information in identifying the right property.
But with time, property advising has evolved beyond brokers,
and numerous online companies with huge investments have
started realizing the potential of the NRI market. They have
developed processes to guide the prospective buyers from
scratch by asking relevant questions, like the purpose of buying
a property, budget, and how they plan to finance it.
Financing a property purchase through loans has its own
challenges and involves lots of paperwork, which delays the
whole process.
NRIs can obtain loans by mortgaging an existing
residential property; however, there are certain
conditions that NRIs need to fulfill in order to avail the
home loans.
Age – The minimum age for a loan applicant is 18-21 years
age. The maximum age limit is 60 years or retirement age
(whichever is earlier) at the time of loan maturity.
Qualification – The minimum qualification of the loan seeker
has to be that of a graduate.
Income – The loan applicant has to have a minimum monthly
income of $2,000 (This criterion may differ across HFCs).
Moreover, the eligibility is also determined by the stability and
continuity of your business or employment.
Payment options – There are the Equated Monthly Installments
which the NRI needs to route through cheques or his/her NRE/
NRO account. Making payments from another source such as
a savings account in India is not allowed.
Number of dependents - Another aspect of NRI Home Loans
is that the eligibility of the applicant is also determined by the
number of dependents, assets and liabilities.
General guidelines for availing Home Loan
Based on the repayment capacity and the cost of the property,
an NRI applicant is eligible to receive a home loan that ranges
from a minimum of Rs 3-5 lakhs to a maximum of Rs 1 crore,
this again is subject to variables depending on the priorities of
the home loan.
A loan applicant can be eligible for a maximum of 85% of
the cost of the property or the cost of construction as applicable
and 75% of the cost of land in case of purchase of land, based
on the repayment capacity of the borrower.
Besides, the Home Loan Tenure for NRIs is different
from Resident Indians.
An NRI can also enhance his or her loan eligibility by
applying for home loans with a co-applicant who has a separate
source of income. Also, the rate of interest for home loans to
NRIs is higher than those offered to Resident Indians. There
is a difference which varies from 0.25%-0.50%. Some HFCs
also have an internal 'negative criterion' for NRI home loans.
As such, the NRIs who hails from locations that are marked as
being 'negative' in the books of HFCs may find it difficult to
procure a home loan.
The cost of a dwelling unit which is own contribution
financed less the loan amount, can be met from direct
remittances from abroad through normal banking channels,
the Non-Resident (External) [NR(E)] Account and /or Non-
Resident (Ordinary) [NR (O)] account in India.
However, repayment of the loan, comprising of the
principal and interest, including all the charges are to be
remitted to the HFC from abroad through normal banking
channels, the Non-Resident (External) [NR(E)] Account and /
or Non-Resident (Ordinary) [NR (O)] account in India.
The repayment option for NRIs as they can pay through
the funds held in any non-resident account maintained in
accordance with the provisions of the Foreign Exchange
Management Act, 1999, and the regulations made by the
RBI from time to time. As most of the home loan provider
companies consider the economic stability of the applicant,
home loans for NRIs are quite feasible, because they are well
in economic resource.
Documentation required for Home Loans
• Passport and Visa.
• Bank Statements for the last six months.
• The labor card/identity card (translated in English
and countersigned by the consulate) if the person is
employed in the Middle East Salary certificate (in
English) specifying name, date of joining, designation
and salary details.
• Valid work permit.
• A copy of the appointment letter and contract from
the company employing the applicant.
29
30. • Another document of vital importance that is
required while processing an NRI home loan is the
power of attorney (POA). The POA is important
because, since the borrower is not based in India; the
HFC would need a 'representative' 'in lieu of' the NRI to
deal with and if needed. Although not obligatory, the
POA is usually drawn on the NRI’s parents/wife/
children.
An important point to be noted here is that the
documentation is different for Salaried NRI Applicants
and Self-Employed NRI applicants.
Salaried NRI applicants need to provide
• Overseas bank account for the last three months
showing salary credits.
• Copy of valid visa/ work permit/ equivalent
document supporting the NRI status of the proposed
account holder.
• Copy of valid passport showing Visa stamps.
• Latest contract copes evidence salary/ salary
certificate/ wage slips.
Self-employed NRI applicants need to provide
• Six months overseas bank account statement and
NRE/ NRO account.
• Brief profile of the applicant and business/ trade
license or equivalent document.
• Passport copy with valid visa stamp.
• Computation of income, P&L account and B/
Sheet for the last three years certified by the CA/ CPA
or any equivalent authority, as the case may be (or
equivalent company accounts).
Property Documents that need to be arranged
• Original title deeds tracing the title of the property
for a minimum period of the last 13 years.
• Encumbrance Certificate for the last 13 years.
• Agreement of sale /construction, if any.
• Receipts for payments made for the purchase of the
dwelling unit.
• Approved plan / license.
• ULC clearance /conversion order etc.
• Receipts for having invested the margin money
through normal banking channels from the Non-Resident
(External) account in India and / or the Non-Resident
(Ordinary) account in India.
• Latest tax paid receipt.
• Allotment letter from the co-operative society /
association of apartment owners.
• Agreement for sale / sale deed /detailed cost estimate
from Architect / Engineer for property to be purchased /
constructed /extended / improved.
• Copy of approved drawings of proposed
construction/purchase/extension.
However, if the PIO card is not available, photocopies of
the documents below will work,
• The current passport, with birthplace as 'INDIA'
• The Indian passport, if held by the individual earlier.
• Parents/grandparents Indian passport/birth
certificate/marriage certificate substantiating the
individuals claim as a person of Indian origin.
Lastly, one basic query that every NRI has in mind is that
whether NRI/PIO avail of loan from an authorized dealer for
acquiring a flat / house in India for his or her own residential
use against the security of funds held in an NRE Fixed Deposit
account/ FCNR (B) account. So, the answer for the query is
yes. Such loans are subject to the terms and conditions as laid
down in Schedules 1 and 2 to Notification No. FEMA 5/2000-
RB dated May 3, 2000 as amended from time to time.
However, banks cannot grant fresh loans or renew
existing loans in excess of Rupees 20 lakh against NRE and
FCNR (B) deposits either to the depositors or to third parties
[cf. A.P. (DIR Series) Circular No. 29 dated January 31, 2007].
Such loans can be re-paid
(a) by way of inward remittance through normal banking
channel or
(b) by debit to his NRE / FCNR (B) / NRO account or
(c) out of rental income from such property.
(d) By the borrower's close relatives, as defined in
section 6 of the Companies Act, 1956, through their
account in India by crediting the borrower's loan
account.
If anyone says the process is easy, it’s not. But, with the right
advice, the whole process can be made a lot less cumbersome
and if the above points are kept in mind, one will be able to ask
the right questions while moving through the whole process.
This is where companies like IndiaHomes are taking a
lead and going beyond just selling, they are helping & guiding
the customer through the whole process.
ABOUT THE AUTHOR
Naveen Kumar Jain, VP & Head of Business Operations & Customer Services, Indiahomes.com
Naveen is an MBA & LLB with 16 years of experience in operations and customer services. At IndiaHomes.com, he
is responsible to ensure that all processes, policies and practices followed by the organisation are customer centric
and should result in an optimal solution for the end user. Naveen has held senior leadership roles in ING Vysya
Bank, HDFC Bank & Stock Holding Corporation of India. Being a certified six sigma black belt & ISO 9001: 2008
lead auditor, the implementation of quality management systems and standards for operational excellence have been
Naveen’s key strengths and areas of focus.
30
