NRIs - Indian Real Estate

-- Business Standard Reporter / Mumbai / New Delhi November 18, 2006 Non-resident Indians (NRIs) with wealth stuck in NRI real estate in India have reason to rejoice. They can now not only cash out on the NRI property they hold in India, but have also been provided an incentive to invest in NRI real estate in India. This has been made possible by the Reserve Bank of India allowing NRIs to remit the proceeds from the sale of immovable NRI real estate. The RBI has lifted the 10-year lock-in as a step towards further liberalisation of the capital account. "The key impact will be that it will provide an exit route to NRI investors, who till now did not have the comfort level to invest in NRI property here as they could not repatriate the gains on account of the lock-in condition. For North America-based NRIs, who may not wish to come back to India, this will provide an opportunity to invest and exit as and when they choose to," said Anshuman Magazine, head (South Asia), at CB Richard Ellis, a real estate consulting company. The remittance of sale proceeds of immovable NRI Real Estate is, however, within the overall ceiling of $1 million per annum. Barring a few premium properties in Delhi and Mumbai, the Rs 4.5 core cap would not be a hindrance in almost the entire Indian market for built-up homes and apartments, real estate analysts said. Banks have been told to allow remittances out of balances in non-resident Indian ordinary accounts, including sale proceeds of immovable NRI properties, provided the amount does not exceed $1 million per financial year. The analysts said NRIs who already own NRI real estate in India, especially inherited titles, would be able to sell and possibly avoid messy family disputes and litigation. Some analysts said the $1 million cap could possibly be circumvented through co-ownership of properties. "You can buy floors in a building and register them in separate names. In this way, an investor can repatriate multiples of the $1 million cap," a real estate expert added.