Investment
in property has been recognized as the unfailing means of
acquiring wealth. The phrase ‘safe as a house’
is clichéd. Yet, it is the only truth in the
context of return on investment scenario.
Return on investment in property is a slow
process. However, it is an investment that never fails.
History also testifies to the fact that investment in property
is a minimal risk investment. The return from the property,
services the investment. The net worth grows over time and
generates income for further investments in property.
Like any other investment, Property investment
is a skill which has to be learned. The investor must
be aware that there are risks attached to any kind of investment.
He must also consciously acknowledge the fact that during
the process of investment the risks attached seem to be magnified.
He must also accept that, the right choice
of property, combined with considered management are absolute
essentials in any property investment. Property investment
is a serious business that requires the right kind of commitment.
Before actually launching into the purchase of a property, the investor must be clear as to the purpose of investment. If investment may be for:
-
Personal use
-
To buy and Let
The purpose will determine the type and location
of the property. In the former instance property may
have to be located close to the place of work or near an educational
institution.
The type of property may not per se
be of importance. Its location may be important.
In the latter case all aspects of the property assumes importance.
It is a property purchased as an investment and the investor
expects a return on property investment.
Investment Property should be selected keeping in mind the following environmental factors:
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High employment area
-
Attractive buildings and surroundings
-
Public Transport facilities
-
High capital growth
-
Developing areas
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Low maintenance costs
-
High demand by letting agents
The Return on Investment (ROI) expected will include factors such as
-
Appreciation of the asset
-
Regularity of rental income
-
Long term stable tenants
-
Care by property managers.
-
Tax benefits
Investing in foreign countries requires an
understanding of the laws and systems as it impacts on investment
by foreigners. It also requires an understanding of
the socio-economic fabric of the country as it will have a
bearing on the value of the property.
Therefore, investing in property in a foreign
land requires the investor to stay in the country for some
time or a study of the socio-economic-demographic and political
setup of the country in so far as it impacts on foreign investment
in property.
India is considered to be a good place to
invest despite the innumerable problems attendant upon political
uncertainty, bureaucratic hassles, power shortages and infrastructural
deficiencies.
The Indian government is also actively encouraging
foreign investors of Indian origin and Non resident Indians
to enter the market and invest in land and immoveable property.
Foreign investment in property in India is
governed by the Foreign Exchange Management Act(Acquisition
and transfer of immovable property in India) (Amendment) Regulations
2002. A number of regulations notified by the Reserve
Bank of India also govern the investment issues relating to
foreigners. Only citizens of India or persons of Indian
origin can invest in property in India.
No non-resident Non Indian can purchase property in India.
However they can take residential property
on lease for a period less than five years without obtaining
the permission of the Reserve Bank of India. They cannot
acquire residential or commercial property by way of gift.
A foreign national who has acquired property in India with
the prior permission of the Reserve Bank of India will have
to seek the permission of the RBI for transfer or sale of
such property to another non resident foreign national.
Foreign
Embassies can acquire residential or commercial
property in India other than agricultural, plantation or farm
house property after obtaining prior permission from the Government
of India, Ministry of External Affairs.
The non resident Indian or Person of Indian
origin need not file any papers with the Reserve Bank of India
if he or she has acquired the property under general permission.
Nevertheless, even Indians residing outside India cannot acquire
agricultural land, plantation property or farm house in India.
However, if he wishes to sell, transfer, mortgage property
acquired in India to a non Indian, non resident person of
foreign origin, he will have to seek the prior permission
of the Reserve Bank of India.
The sale proceeds of inherited property sold
in India by a non resident Indian or person of Indian origin
can be remitted or repatriated from India to the extent of
one million USD per calendar, subject to the production of
documentary evidence in support of the inheritance and tax
clearance certificate.
Basic
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To Delhi | Buying
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Investment Real Estate Buying Guide | India
Real Estate Investment Overview | A
Real Estate Investor’s Country Guide |
