The reasons for investing in real estate in India are as numerous as the investment opportunities. While it can provide you with a steady return over time, there are certain risks to consider. Listed below are some of the benefits and risks of investing in real estate in India. Before starting your investment, make sure to research the different options thoroughly. You can find a lot of real estate properties in India, and you should choose the one that is most suitable for your needs.
A good property in India will offer you a high rental yield. In most cases, you can expect a return of 2-5 percent for residential property. A professionally managed commercial property can fetch you a higher return. However, keep in mind that a return of 7-8 percent will be possible post-tax. NRIs can invest in any kind of property in India except for agricultural land. As long as you do not violate the foreign exchange management act and the regulations of the Reserve Bank of India, you should be able to invest in real estate in India.
Another reason for investing in real estate in India is the safety of your investment. Real estate is an asset that has the potential to increase in value for many years. You can earn from rental income and profit by selling the property later. A property manager can help you manage the property and make sure it is being properly maintained. Purchasing real estate in India is an excellent choice for the long-term. With the economy and cities expanding, investing in real estate is a safe bet.
The real estate market in India is growing rapidly. In the last five years, property prices in Indian metro cities have increased by an average of 5% per year. When combined with the rental yield of up to 3.5 percent, this represents an eight-percent p.a. return on investment. Furthermore, investors can take advantage of the capital gains tax exemption that comes with real estate investment in India. A good reason to invest in real estate in India is that it not only provides a decent capital appreciation but also stable income over the long run.
The NRI community has a huge advantage when it comes to investing in Indian real estate. Since the rupee value is at an all-time low of Rs 75 against the dollar, it will increase their purchasing power. In this way, the cost of a plot in a fast-growing locality may only cost one lakh dollars at present, which will allow them to save a significant amount of money over the long-term.
The risks that come with real estate investment come from not conducting thorough research, buying property from a disreputable developer, and not having a proper construction plan. Besides, real estate investments are capital intensive and illiquid, making them risky for those with low credit scores. Moreover, you will have to maintain an ideal credit score to secure a home loan. Lenders will also check to make sure that you can pay the EMIs.
