Ans.: Yes. Reserve Bank has granted general permission for sale of property. However, where another foreign citizen of Indian origin purchases the property, funds towards the purchase consideration should either be remitted to India or paid out of balances in non-resident accounts maintained with banks in India.

Ans.: In the event of sale of immovable property other than agricultural land/farm house/plantation property in India by a NRI or PIO, the authorized dealer may allow repatriation of the sale proceeds outside India, provided all the following conditions are satisfied: -

The immovable property was acquired by the seller in accordance with the provisions of the Exchange Control Rules/Regulations/Law in force at the time of acquisition, or the provisions of the Regulations framed under the Foreign Exchange Management Act, 1999;

NRIs/PIOs can effect remittance of sale proceeds of immovable property in India irrespective of the period for which the property was held. The sale proceeds allowed to be repatriated should, however, not exceed the foreign exchange brought in to acquire the said property.

In case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties, if the property was purchased from funds held in NRE Account.

The amount sought to be repatriated abroad should not exceed the amount paid for acquisition of the immovable property in the foreign exchange received through normal banking channels or out of funds held in FCNR or NRE Account. In case of investment out of NRE Account the amount to be calculated as foreign currency is equivalent value as on the date of payment for acquisition of the said property.

Ans.: An NRI can borrow against the security of immovable property from Authorized Dealer subject to following conditions:
i) The loan should be used for meeting the personal requirements or for borrower's own business purposes; and
ii) loan should not be used for forbidden activities, namely;
(a) business of chit fund, or
(b) agriculture or plantation activities or in real estate business, or construction of farm houses, or
(c) trading in Transferable Development Rights (TDRs), iii) the loan amount cannot be remitted outside India,
iv) repayment of loan shall be made from out of remittances from overseas or by debit to NRE/FCNR/NRO account or out of the sale profits of shares or securities or immovable property against which such loan was granted.

Ans.: The relaxation of FDI in the construction development sector announced in March 2006 allows NRIs, PIOs and all foreigners equal opportunity with their Indian counterparts in the Indian real estate sector. The new guidelines states that before selling, the site has to be developed, constructed upon or fulfill the criteria of minimum one year development.
i) NRIs, PIOs and foreigners can now invest in land, buy it, construct upon it or develop it, sell constructed buildings/developed plots
ii) FDI through automatic route can also flow in not just for the housing sector, but also for townships, housing, commercial area, and infrastructure development
iii) Restrictions on minimum area of land, minimum number of units has been removed
iv) Minimum constructed area required is 50, designated area is 25 acres

Ans.: The norms are quite liberal. It allows you five years to finish at least 50% of your project from the date of getting all the clearances. In normal circumstances the project can be completed within three years. It helps protect the customer and keeps fly-by-night people at bay.

Ans.: The automatic route has simplified much of the cumbersome investment process. Approval from the Reserve Bank is not required anymore. No need to go to the Foreign Investment Promotion Board either. The easing of paper work and relaxation of formalities has given a boost to overseas investor confidence for investing in India.

Ans.: Any NRI before investing in the Indian real estate should also focus on the particular segment that he plans to invest in - like residential, retail or office space. Consulting legal firms and real estate firms providing professional NRI services can be very useful.

Ans.: A lot depends on the segment you want to invest in. It helps to gauge the future state and to know what utilities are available.
i) An office market investment, for instance, requires you to:
ii) Get in touch with consultants for advice on the city of choice
iii) Outline your objectives, the size of your investments
iv) Have an approximate of the returns you are expecting.
v) The yield that has evolved from distinct parameters ranges between of 8 - 8.5% to 12% for office space and 4% - 6% in residential
vi) Whether the land is for investment or for development is also a deciding factor, as is the local demand-supply situation
While investing in India, the availability and quality of infrastructure or utilities like power, connectivity, security and long-term future plans need to be scrutinized.

Ans.: Single window in a real estate project in India sometimes may be difficult, because of the involvement of several authorities. If it’s a multi-storied building, you need to get clearance from town planning authorities, clearance on design, elevators, fire fighting agencies, etc. Efforts are on to make the process simpler and transparent, though.

Ans.: (a) In some states, the Municipal authority is the ultimate monitoring authority
(b) In smaller states and in non-urban areas, the town and country planning corporation acts as the monitoring authority
(c) In urban areas where most of the construction takes place, the municipal authority wields power in giving the final permission and sanctioning drawings and plans. Clearances on electricity, water supply and other utilities come from here

The new FDI norms state that the minimum investment has to be USD 5 million for 51% shareholding. Does this include funding of subsidiaries as well?
(a) If you have a wholly owned subsidiary by a foreign company then the minimum capitalization norm is USD 10 million
(b) If you have a joint venture, the ratio 74:26 or 51:49 is immaterial. For a joint venture, the minimum capitalization is USD 5 million in foreign exchange
(c) This minimum amount of foreign exchange is required to arrive within six months from the date of commencement of business. The six months can be used to bring that money into India

Ans.: Healthy competition is important and necessary. However, in the case of FDI, joint venture definitely seems the wiser route to take as it has tremendous scope. The Indian partner would always be in a better position to provide inputs in terms of information on land and clearances, where the foreign investors can put their money, use technology judiciously and opportunities where both can complement each other.

Ans.: Currently, as big foreign investors are foraying into India, their main interests have been in joint ventures. The first couple of transactions or strategies have gone this way and large joint ventures have been struck. Trends show that in the initial years, FDI inflow into real estate in India will come through joint ventures. Efforts to improve infrastructure and speed up reform processes, better tax rules, computerization of land records and more transparency have ensured enhanced investments and developments in the Indian real estate industry

Ans.: The response received post relaxation of FDI in the construction and development sector has been very optimistic. This can be seen as a catalyst to investment as it would have a multiplier effect on the economy.
Other sectors that will receive a boost include:
(a) Technology, associated infrastructure that will be built.
(b) Growth of associated industries such as steel, cement, building material, designers, etc.
(c) Job opportunities for unskilled, semi-skilled workers, artisans, engineers, architects and the like.

Ans.: NRIs can freely rent out property (source of acquisition of property not significant)
(a) Freely repatriate rental income without prior permission.
(b) Tax deducted at source on rental income, adjust rental income against home loans

If loan amount is higher, pay through NRE, NRO and FCNR accounts.
(a) Short term Capital Gains - property held for less than 3 years.
(b) Long term Capital gains - property held for more than 3 years
(c) NRIs/PIOs can take the advantage of indexing the cost of acquisition and improvement, investing of sale proceeds in special Bonds
(d) On deciding to sell the rental property the NRI can apply to the Income tax authorities for the certificate to be deducted at source