Investment In Real Estate In India

Indian real estate has huge potential in almost every sector especially commercially, residential, retail, industrial, hospitality, healthcare etc. However, the major developments in this sector in India are mainly the townships, residential units, shopping malls, offices, retail stores and commercial complexes.

The major growth has come due to increasing purchasing power, favorable demographics, existence of customer friendly banks & housing finance companies, professionalism in this sector and favorable reforms initiated by the government to attract global investors.

Real estate investment in India is primarily a long term investment provision low liquidity to an investor. Investors can look at renting out their property to bring consistency in revenues. This can also reduce the burden of EMIs for a property purchased on a loan. According to a survey conducted by ASSOCHAM, 65 per cent of working individuals prefer this sector as a mode of long term investment.

There are many banks and financial institutions that provide loans at attractive rate of interest to the builders. For example, HDFC Property Fund, Kotak Mahindra Realty Fund, and India Advantage Fund (ICICI), provide the funds for this sector development to the builders and developers for construction.

NRI real estate business is also on the rise in India. Recession had negligible impact on this sector. Therefore, the sector is opening up more and more investment opportunities for both domestic as well as foreign investors. This sector is extremely a profitable venture, as the profits of investors have almost doubled or have derived 100 per cent profits in the residential segment.

The preferred time horizon for investment in this sector is four to seven years for better returns. The industry is popular for providing the second largest employment just after agriculture. One of the major reasons for this development is the policies taken by the Government of India.

Reforms initiated by the Indian Government

The Government including reserve bank of India (RBI) and Foreign Exchange Management Act (FEMA) has liberalized the rules and regulations for the NRIs to make investment in real estate. India has emerged as a top-most favorable destination for foreign direct investment (FDI) in the world with 100 per cent relaxation of FDI regulations in this sector.

The Government of India has now allowed international and domestic companies to operate real estate funds through private equity funding. RBI has also reduced its rate of interest in the home loan division.

Tax Advantages

People can avail the huge tax benefits on investing in real estate:

  • Tax exemption is available on re-investment of sale proceeds of property in eligible possibilities.
  • Tax benefit is available on interest on housing loan raised in India.

Nowadays, real estate investment in India is more productive and revenue generating in comparison to other businesses. India is a safe investment destination for this sector with assured returns of 10 to 12 per cent.