THE NRI EYE: Gulf investors bullish on India

India is fast becoming a favoured investment destination not just for its own diaspora, but also for institutional investors from the Gulf region. The most attractive avenue for major Arab players seems to be real estate.

Investment pouring into India’s hot property market from the Gulf region have crossed the $35bn mark, says The Economic Times. The combined value of the various real estate projects being developed by Gulf-based real estate firms has touched $37 bn.

The Gulf’s oil-fuelled current account surplus will hit $227bn this year, according to the Institute of International Finance, and that money is looking for a home. With domestic real estate markets saturated and the west seen as increasingly hostile by some, Gulf investors are turning to India’s emerging property market.

Gulf investors know India well, explains Richard Dean in The Financial Times. The country’s financial centres are a short flight away and many of the professionals managing Gulf money are Indian expatriates. Their intention is to develop the projects in which India’s fast-emerging middle class will live and work.

So far the Reserve Bank of India (RBI), the country’s central bank, has restricted foreign investment in property, fearing that an influx of funds could stoke inflation. But the finance ministry worries that stalling investment could stunt India’s growth and the balance appears to be tipping in favour of allowing more money in.

Fuelling this growth are companies like Emaar MGF, which announced its plans to develop SEZs, residential projects, hotels and malls and hospitals in the country at an investment of $12bn. Earlier this year, leading real estate developer DLF tied up with Nakheel to develop two townships in the country at a cost of $10 bn.

Similarly, Dubai-based developer ETA Star Properties announced a month ago its plans to develop a $923m IT park at Chennai, taking the group’s total investment value in India to $4.35bn so far.

Global Asia Real Estate, Dubai Properties, the Signature group, the Palmon group are some of the names that have so far made firm commitments to invest in the local property market.
In yet another instance, the UAE-based Palmon group invested $9.5m in Mumbai’s BSEL tech park. It is scheduled to invest in other cities such as Bangalore and Hyderabad. BSEL Infrastructure has other projects in Maharashtra and Gujarat and recently got contracts worth $134m for developing shopping malls in Nagpur.

Meanwhile, Dubai-based asset management firm Signature group is learnt to be close to launching several real estate funds for investment in the UAE and India, totalling over $650 m.
Istithmar, the private equity arm of the Dubai government, is also bullish on making investments to expand its horizons in the hospitality sector and other infrastructure projects in India. The company holds a global real estate portfolio estimated at $7-$8bn. Also, it was in holding high talks to buy Asian property assets worth at least $250m and expects to enlarge its portfolio by this year’s end.

Institutions all over the Gulf have predicted a bright future for investments made in India.
Kuwait Investment Company (KIC), for instance, sees an increase in GCC investment into India in the next three years. According to data released by the company, a major part of the investment will see its way to Indian real estate.

For the past few years, Indian realty has been a common hunting ground for large institutional investors investing high values, a trend which is expected to shape further.

Gulf Finance House (GFH), a leading investment bank, and lead financial advisor to Energy City Qatar, plans to buy 600 acres in Navi Mumbai to set up India’s first integrated energy business district — Energy City India — with an investment of $2bn. The project will come up within a few kilometres of an upcoming international airport in Navi Mumbai.

First Click For NRI Investors

When an NRI wants to invest in India, what is his first step? Look for opportunities in India through different government bodies promised as 'a one-stop shop'. As if all the existing bodies to attract investment were not enough, the ministry for overseas Indians launched a new one last week - the Overseas Indian Facilitation Centre (OIFC).

Exploring on the Net, the NRI will come up with many different sites of the Indian government crying for foreign investment in India, especially from NRIs. Frustrated by India's red tape, NRIs want 'a single window' to handle all their queries and hold their hand until they get the approvals.NRIs have been promised and provided 'a single window' to invest in India time and again.

Much before the Internet and since the days of forms that were filled up by hand, the one stop point of contact for NRI investors has always existed in one form or the other.All these government-run facilities, as part of different ministries, remained overburdened with red tape and bogged by infinite delays. Over time, they morphed into new ones promising to be better - and faster - than before.

This has happened at both the central and state government levels. Every new government that takes power in New Delhi or in states wants to boost investment and so investment promotion with foreign tours is the first priority.Just search the web, and an NRI will find dozens of groups all out to assist him to invest in India.

The Indian Investment Centre, a government body with more than three decades of rich experience in investment promotion, is the first contact point and is the single window agency for authentic information or any assistance that may be required for investments, technical collaborations and joint ventures.All its services are free of charge, claims its home page. Of course, it has a special section for NRIs who are offered 'escort services' that include match making, arranging meetings and forwarding applications.

The ministry of commerce and industry is responsible for foreign direct investment (FDI) in India and has a unit to promote investment. The Foreign Investment Promotion Board under the finance ministry approves the investments. The approved projects are listed regularly.Then most state governments have an investment promotion centre as a separate body or a part of one of its ministries. These can also be accessed on the Internet. So what is special about the latest body to tempt NRIs to sink their money in India?

Private sector partnership!This can perhaps be expected to be more efficient as it has the Confederation of Indian Industry (CII) in partnership with the ministry of overseas Indians and is meant for NRIs and not large businesses.The CII organized the Pravasi Bharatiya Divas this year for NRIs and the event showed some improvement in achieving its aims. One of the demands made by NRIs was the creation of a centre where their abilities, qualifications and experience could be harnessed for India's progress instead of merely attracting their funds.Within five months, this demand has been answered with OIFC.

Its website, www.oifc.in, has almost the same information as the other investment promotion sites like India's economic progress. But the section on 'Opportunities in India' is a misnomer. As one goes to it to get a list of potential investment projects, one finds snippets of interesting economic information like 'India has more billionaires than China'! Surely, CII can do much better than this!The centre, through its website and offices, will provide reliable data on investment opportunities free of charge and assist in getting individual projects cleared as a paid value added service.

If the investment opportunities are free, it is hoped that these are listed on its site soon since CII should have a database of these projects both state-wise and sector-wise.The centre will provide 'authentic and real time information', promised Minister for Overseas Indian Affairs Vayalar Ravi. This will include consular and financial services and related advice.

The centre will screen the opportunities available in the country before listing these for NRIs so that they do not fall prey to "fly-by-night operators" and cheats, said Ravi. Thankfully, the centre will be managed by CII and will operate as a non-profit trust.In June, CII is holding a meeting with about 100 NRIs in the US to inform them about this centre in partnership with industry.

India hopes to attract $32 billion investment this year.NRIs remitted $23 billion last year mostly for their family members. Will they invest more after their first click at this new site? Only time will tell.

Process Of Investment in India For NRIs

When India looks for investments in various sectors, among others, it turns to the NRIs, the case in point being Resurgent India Bonds. The process of investment into India has progressively been made simpler and in many cases, no permission from the RBI is needed before investing in India.

However, before we discuss the actual process of investment for the NRIs, let us look at some of the issues faced by the NRIs when they invest in India currently. Investing in India is typically a one time event every year when they come to India. Massive mis-selling occurs due to time pressure and the need to close a deal.

The ‘MUST’ list

>>Get a PAN as it’s the most important document required by NRIs.
>>Open an NRE account to maintain repatriability of the funds invested in India.
>>Have a local representative to invest in illiquid assets.
>>Find a financial advisor to get legal and international tax advice.
>>The financial planner should help the NRI develop a long range financial plan for investment of his assets and insurance needs

Process of investing in India

Get a PAN: The most important document or registration required by NRIs is the Permanent Account Number (PAN). This is available to many first generation NRIs as a legacy of their stay and working in India. Getting a NRI PAN card is easy with the private PAN facilitation centres, which issue PAN within a few days.

Opening a banking relationship: Since all the investing transaction require a banking channel (buying and selling, parking funds, etc), opening a bank account is the next steps. Banks are more than eager for NRI accounts since they tend to maintain higher balances and offer great opportunities for cross selling. Open an NRE account to maintain repatriability of the funds invested in India. Banks allow NRIs to nominate a local representative who has the “mandate” to operate the banking account on their behalf.

Appoint a local representative: Investing in illiquid assets like real estate might require the NRI to appoint someone in India as his local representative. The NRI needs to give a “power of attorney” to the local representative detailing the powers that the representative can exercise on behalf of the NRI.

If the NRI does not want the hassle of writing cheques to his insurance company or to his mutual fund company, he can give his local representative the right to sign, invest and redeem on his behalf.

Identifying a financial advisor: Similar tests apply for the NRI when it comes to choosing a financial advisor. He needs to find someone who can win his trust. He needs to look at the ability of the advisor to service him. The client should not be too large or too small for the advisor.
Look at the ability of the financial advisor to provide legal and international tax advice. This can be important, especially since the NRI might do many transactions “sight-unseen” and across tax-geographies. In case of professionals, if the company has accredited financial advisors, then the professional knows where to go.

Deciding on asset allocation and insurance needs: The financial planner should help the NRI develop a long range financial plan for the investment of his assets as also for the insurance needs of the client. While it may not always be feasible for the advisor in India to research the market dynamics across the portfolio of his client, he should have a basic understanding of the risks on his client’s portfolio. Depending on the long-term needs of the client, the advisor needs to decide his India and Indian rupee allocation.

Understanding of the local laws (including taxes) and customs: There can be many quirks in the local law that the NRI should know. For example, while repatriation of sale proceeds of house property is allowed, it is limited to two such repatriations per individual. Similarly, capital gains bonds are available only up to Rs 50 lakh per person per year.

In case the NRI has made larger capital gains, he will need to pay the tax on that or reinvest in another property. Similarly, an understanding of the local customs can go a long way in helping the NRI set expectations correctly. While there is increasing professionalisation on the real estate development, there are many cases when the projects take much longer to complete.

Source: Economictimes

NRIs May Face 3 Year Pre-IPO Realty Lock-In

The government is planning to plug another potential source of foreign funds for the real estate sector. Non-resident Indians planning to invest in real estate projects ahead of initial public offers could face a three-year lock-in along with foreign institutional investors (FIIs).

The government is planning to introduce a lock-in for pre-IPO FII investors in realty companies in bid to prevent a possible real estate bubble. The restrictions are also aimed at checking sudden flight of capital.

By putting a lock-in period for NRIs, the government could also effectively discourage the promoters' own funds coming into the company through the NRI route. Indian promoters are generally known to use NRIs as fronts to get their own money abroad invested in their companies. A lock-in period might act as a deterrent for promoters bringing such funds through the NRI route.

The government is likely to amend the Foreign Exchange Management Act to make all pre-IPO investments face a three-year lock-in, a government source said. However, the other conditions such as minimum capitalisation and area of development will be limited to foreign direct investments.

Real estate companies which are planning to hit the capital market will have to tweak their plans to meet the proposed norms, expected to be notified shortly. Some real estate companies that have sought permission for making pre-IPO placement to FIIs have been told to wait till the government finalises the foreign investment norms for the real estate sector.

Up to 100% FDI is allowed in realty projects with certain conditions like a three-year lock-in on investments, minimum capitalisation of $5 million and development of at least 10 hectares of land. These conditions are applicable on all foreign investors, including NRIs.

Earlier, there were differences between the Department of Industrial Policy & Promotion and the finance ministry on the treatment of pre-IPO placements. DIPP had favoured treating pre-IPO placement to FIIs as portfolio investment.

However, the Reserve Bank and the finance ministry were of the view that pre-IPO investments by FIIs cannot be treated as portfolio investment and the FDI norms be adhered to. Nearly half of the over $4-billion foreign investments which came in real estate sector in 2006 was through private placements.

Source: Economictimes

NRI Remittances Keep CAD Within Limits

The Reserve Bank has discarded the fears that India's current account deficit (CAD) would contribute to global imbalances, saying it is presently 1.7 percent despite a trade deficit of close to seven percent due to remittances from Indians working abroad.

Remittances provide an in-built cushion to balance of payments and help keep the cad within sustainable limits, RBI Governor Y V Reddy said, adding in this sense, the Indian economy has not contributed to the current global imbalances.

Addressing a gathering at the bank of Japan recently, he said: "the level of foreign exchange reserves is extremely modest compared to that of Japan, our reserves exceed each - a full years imports as well as the entire external debt."

On further reforms, Reddy said deregulation in the financial sector should be in tune with progress in the real and fiscal sectors.

"As we progress further in the reform process, the main focus would be to ensure that the pace of further deregulation and liberalisation remains consistent with the progress of reform in the real and fiscal sectors," he said. Reddy emphasised the need for proper implementation of the reforms in the banking sector and said the implementation should be in tune with national and global developments".

"In practice, within the given legal framework, priorities have to be appropriately set ensuring implementation of intended reforms in banking sector in tune with the evolving domestic and external developments," he said.

NRI Deposits Fail To Pick Up Despite Rising Rupee

NRIs park their foreign currency savings in either the non-resident (external) rupee accounts (NR(E)RA) and the foreign currency non-resident (bank) accounts (FCNR(B)). Of these, the FCNR (B) deposits do not involve any exchange-related arbitrage since the accounts are denominated in foreign currency.

A rising rupee appears to have failed to catch the attention of NRIs. A stronger rupee gives them exchange-rate benefit when they convert dollars to open rupee accounts. Bankers feel that a lower rate of interest offered on such deposits seems to have taken away the sheen from such deposits, and inflows have slowed down since February. The rupee has strengthened by more than Rs 3.50 a dollar since March this year, as it now trades at Rs 40.50 against the greenback compared to Rs 44.25 in March.

In case of NR(E)RA deposits, once the foreign currency deposit is made, it gets converted into rupees. And, it again gets reconverted into dollars at the time of redemption. Consider this: An NRI had made a deposit of $100 for one year in May 2006, when the value of the dollar was Rs 45.88. This gets translated into a rupee deposit of Rs 4,588. One year down the line, even if there was a zero interest rate, the rupee funds would fetch him more dollars as Rs 4,588 at the current dollar rate of Rs 40.50 would translate into $113.28 on maturity.

Despite this advantage, there seems to be little interest in these deposits. A senior official from a private sector bank said, “Despite the rising rupee, lowering of rates has made such deposits very unattractive and we are rather seeing a slowdown. Also, interest rates have been rising in developed markets, which may seem to be more lucrative.” According to Bank of India executive director KR Kamath, NRI depositors normally take a long-term view on the rupee. “We expect a growth in such flows, but it has not yet happened,” he said.

Of late, RBI has further capped the interest rates. In April this year, RBI has capped the interest rates on the 1-3 year NR(E)RA term deposits at the London Inter-bank Offer Rate (Libor) prevailing on the last working day of the previous month.

Source: Economictimes

Fund Infusion into Pune Real Estate

Real estate Pune is on a roll, with real estate mutual funds and private equity investors investing in various projects in the city. The latest investment comes from the HDFC Real Estate Fund which has purchased a 10% stake in Pune’s leading real estate firm Paranjape Schemes.
Worth Rs. 75 crore, the funds would be utilised by Paranjape for their upcoming real estate projects in Pune. The developer has an array of projects on the anvil, for which capital would also be raised from the market. Plans for an IPO are afoot. One of the projects of Paranjape, an integrated township in Pune, would be financed by GE Capital.

The deal was signed by the two partners to the project for Rs. 250 crore recently. The GE investment is exclusively for the project, without GE having any holding in the company.
Paranjape Schemes is an established real estate company in Pune and has executed 100 projects till date, including a special project for senior citizens, offering unique advantages to elders.
The company also offers exclusive services to NRIs investing in their residential projects in Pune - these include housekeeping and travel services HDFC’s real estate arm, launched in 2005 is India’s first real estate fund, and already has assets valued at Rs. 1,000 crore.

It had recently purchased stakes in Vascon Engineers, another Pune-based real estate developer. The HDFC Real Estate Fund managed by HDFC Venture Capital, which in turn has SBI holding 19.5% of its stocks, invests in various realty projects in the planning, construction and completed stage. Both commercial and residential projects are covered in its ambit.

Source://www.nrirealtynews.com

NRIs and IT Drive Property

Until a few years back the banyan city, Vadodara, hardly figured on the list of hot real-estate destinations. Land, commercial and residential property was easily available at highly affordable rates. But in recent years, the huge inflow of industrial investment from across sectors and growing interest of real estate developers, retailers and IT giants in the tier-III cities has put Vadodara on the growth trajectory. It’s difficult to find a good piece of land in the best areas at the right price in the city with a population of just over 15 lakh.

The Gujarat government is already working on a plan to develop Vadodara as a knowledge city to attract several l leading companies such as DLF, Raheja, Infosys and Satyam to invest in the city. The IT boom is also further driving the housing demand in the city. However, Vadodara still is facing tough competition from tier-II cities. “Vadodara has huge growth potential but it faces competition from Ahmedabad and other tier-II cities which are preferred investment destinations for leading IT players.

The non-resident Gujarati (NRG) investment pouring into the city is also expected to drive the real estate growth,” says Sanjay Dutt, deputy managing director of Cushman & Wakefield (India). With key cities in the state becoming more populated, the state government is also working on a twin-city development project wherein Vadodara and Anand will be developed together. Through such initiatives, the government is encouraging residential development in places around the key cities.

Land prices in Vadodara have appreciated by almost 50% in the last two-three years. The residential and commercial property prices in Vadodara too have shot up in the last two years. The cost of office spaces have increased to Rs 2500-Rs 3000 per square feet now from Rs 1500- Rs 1700 two years ago. The residential property prices have jumped to Rs 1500-2000 per square feet in key areas as against Rs 1000-2000 per square feet two years ago.

In Vadodara, investment in residential projects mainly comes from the actual buyers as the concept of second home is yet to pick up here. “The retail as well as office space demand is expected to gain momentum. Several tier-III cities in the population bracket of 60,000 to one million is on the radar of the leading retailers. However, we don’t expect oversupply of retail space in the city,” said Shubhranshu Pani, vice president, retail services of Trammell Crow Meghraj. The newly developing areas such as Sindhrot, Waghodia road, Padra road, Ajwa Road and Sevasi are emerging as promising options for investors.

The proximity of the city to Ahmedabad and Surat, the key investment hot spots and the improving civic infrastructure too are fuelling the growth. Under the Jawaharlal Nehru Urban Renewal Mission (JNURM), the ministry of urban development has already approved investment proposals of around Rs 3000 cr by the Vadodara Municipal Corporation (VMC) and Vadodara Urban Development Authority (VUDA).

“A lot of national retail and IT players are now investing in Vadodara. Also several international funds too are investing in the local real-estate firms enabling them to further expand locally,” says developer Rajiv Patel of Sun Worshipers. However, despite good purchasing power, entry of lot of retailers in the city is expected to create an oversupply, feels Dutt.

Source: Economictimes

NRIs Fuel Realty Boom in Nagpur

Twenty-five-year-old Manish Vinchukar has no time for himself these days. The deals are waiting to be struck, and the property dealer is on the bandwagon to make money. Nagpur’s realty market is hot with prices shooting through the roof.

Next month, Manish is set to fly to Dubai to make a presentation on Nagpur realty - and he’s sure to get a good response from the Indians working there. "They are among the preferred customers," he says. Next, he plans to land in the US to woo the Indians working there.
The realty frenzy is crossing the seven seas in Nagpur. More number of Non-Resident Indians (NRIs) are buying properties here - a trend that has fueled realty prices in the past year, say real estate agents. The developers and real estate brokers are also on the move to tap a large base of NRIs, who’ve their roots in the city or region.

Thousands of deals are struck every day, and vast stretches of agriculture and non-agriculture developed land are changing hands, say the city’s property dealers. "About 20 per cent of our clientele is from outside India," says Sanjay Kaikade, one of the directors of city-based Vastu Vihar Developers Private Limited. "Most of the NRI customers are originally from Nagpur, but others are also buying," adds Kaikade.

"Currently, the NRI investment in the city real estate is quite robust, which contributes to the price rise," says another well-known builder Mahesh Dabholkar. Many real estate brokers and agents make trips abroad to hold marketing fairs to attract the NRI investors from Middle-east, UK and even the US.

"Almost 25 per cent of our bookings are by NRIs," says Satish Bais, a managing partner in Rudra Real Estate. Bais, an old timer in the construction business, adds, "Internet is proving to be a tool in facilitating the deals. Many of us advertise on the realty-websites and get good clients from abroad, who give power of attorney to their relatives here for the registration of deeds,"

"In one of my row-houses and bungalow schemes, customers from the US went for bookings together. All of them are originally from Nagpur," says Bais.

Obviously, the stamp duty collections on registration of sale deeds in rural areas of the district have also shot up. The duty collected from Nagpur-rural area was about Rs25 crore in the 2005-06 as against Rs18.6 crore collected during 2004-05. The figures for the 2006-07 are not available yet, but rough estimates suggest a phenomenal 40 per cent rise.

Source://dnaindia

NRI Ties Up With London Firm For Mini-Townships

Foreign investment in the booming real estate sector of West Bengal gets a boost with a London-based company joining hands with an NRI entrepreneur to invest $20 million in two mini-townships here.

London-based REIT Asset Management, which plans to create $1 billion assets in India in the next three years, has tied up with Eden Realty Ventures Private Limited, led by US-based Indrajit De, to set up the projects at Bonhooghly in north and Maheshtala in south in greater Kolkata area.

"The cash investment in the two projects is $20 million besides collaterals for bank finances," Eden Realty managing director Sachchidanand Rai told media agency. "REIT India chairman David Cohen finalised three projects in India out of 140 proposals and of the three two are developed by us here," said Rai, an alumnus of IIT Kharagpur. REIT, the London-based real estate management trust, owns $6.8 billion worth assets in Europe.

The twin project in Kolkata in collaboration with Eden is their maiden venture with an Indian partner since their other project at Pune is a 100 per cent FDI. According to David Cohen, the chairman of REIT property Management India, the projects are the beginning of "a long-standing relationship with the state and the city". "We are proud to be associated with REIT," said Indrajit De, the NRI entrepreneur, from USA. Rai said of the two projects in Kolkata might be the state's highest cash investment in the form of FDI by any foreign company on real estate.

In the northern project at Bonhooghly, to be known as Bonhooghly Tenement Scheme, 18 acres of area would be developed after the same was obtained from the West Bengal government's Refugee Relief and Rehabilitation Department. "We will be giving about 800 flats free to the equal number of refugee families living there now in a deplorable state.

The flats would be much bigger than they are living now and they would also be provided open parking space for 200 cars besides community facilities like club, gym, treated water, good sewerage. "While 6 acres would be for rehabilitation with not even stamp duty fee, the remaining 12 acres would be commercially developed with 25 tall buildings offering 1476 flats. We will also beautify the lake inside," said Rai.

In the southern project at Mahestala, which is a joint venture with Mahestala Municipality, 21.22 acres of land has been acquired near Nungi station on the Kolkata outskirts to build 2240 MIG flats in 44 buildings, said Rai.

"We are also offering a full fledged football ground, a centre for sports, science and culture to be donated to the municipality. We have also proposed to build a 2.5 km road in the area besides widening a 5 km stretch of road," he said. "Our aim is to develop through innovations. We want to come forward with deep projects," said Rai.

Source: Economictimes

Rs 850-cr township comes up in Kerala

n a bid to capitalise on the NRI investments as well as the gold trade that together drive Thrissur’s local economy, Bangalore-based real estate developers Sobha Developers launched one of the largest fully integrated townships in Kerala on Saturday.

Called Sobha City, the 55-acre township is being built at an investment of Rs 850 crore. The township, covering 3 million sq ft will be built around a 6.5 acre man-made lake and will have 78% residential and 22% commercial areas.

To be completed by May 2011, the price ranges from Rs 2 crore for a villa (spread over 4,040 sq ft) to Rs 67-85 lakh for a three/four bedroom apartment (1,800-3,000 sq ft). While there will be 25 villas, the configuration of the three and four-bedroom apartments would be 423 and 216.

On why Thrissur was chosen over the commercial capital of Kerala, Kochi, for launching the project, P N C Menon, chairman, Sobha Group, said, “With 40% of Thrissur’s economy being run on NRI investments and the remaining on the gold trade, the city was a perfect bet over Kochi, where land rates would be much higher. ”

Source://FinancialExpress

THE NR EYE: Real estate investments beckon NRIs

The hike in interest rates by the Reserve Bank of India, the ongoing regulatory reforms by the government and enhanced liquidity place non-resident Indians in a very good position to park their excess funds in property back home।

These factors, coupled with the phenomenal growth pattern currently being experienced by the real estate market in India, have not gone unnoticed on the real estate companies which have high expectations of overseas Indians।

India’s FDI climbed to a record-breaking $11।2bn in 2006, a 155 per cent year-on-year increase. Reformed real estate investment regulations for Non-Resident Indians (NRIs) and more crucially foreign investors have provided the impetus to drive the value of the Indian real estate market towards $50bn by 2010.

In 2005, the Indian government announced that FDI in the real estate sector was permitted through the ‘automatic route’, in other words without requiring additional ministerial approvals, streamlining the investment process। Certain guidelines are in place regarding minimum land areas to be developed and minimum capitalisation requirements, but the net effect has been a massive inflow of foreign capital. It is estimated that capital worth $7bn will be pumped into development projects over the next year, much of that emanating from overseas.

The boom is not at all surprising, what with a population of 1।2 billion, growing annually by 1.4 per cent, a cost effective and educated work force and economic growth of eight per cent per annum. These conditions combined with competitive interest rates and a burgeoning IT industry, are driving the demand for not only residential but commercial space that is expected to reach 70 m square feet within three years, with retail developments taking up to an 11 per cent share.

The Indian government now has recognised the demands of NRIs and people of Indian origin to own pieces of property and over a period of time what we have seen is that the investment is both for them to come back and some form of speculation because India as a market now is giving good returns and the economy is booming so a lot of people are looking to come back.
The rules have been much simplified and it has become much easier to buy property for the NRIs। The new act FEMA (the Foreign Exchange Management Act) that is a vast difference from the regulation act (FERA) has made a tremendous difference in acquisition of property and sale of property and even repatriation of money if one has got property and he is selling it of. Overall things have improved for NRIs and it is a great time to be here.

The government of India has granted general permission for an NRI to buy property in India and he has to pay no taxes even while acquiring real estate India but however certain taxes have to be paid if he is selling this property। He would require a PAN card if he has rented out this property and he wants to repatriate that money but if it is going to be a sale of property depending on time or the duration of time he has held the property, the sale proceeds would be subject to capital gains tax and as of now if he has held the property for less than three years then he would be paying roughly about 30 per cent tax and if the property has been held for more than three years then 20 per cent as capital gains tax and that is what he will have to pay.

The list of incentives is quite comprehensive and, for example, allow an NRI to acquire property in India with exception to agricultural/plantation property or a farm house without formal permission। They are also entitled to transfer this property to any resident Indian without the prior permission of any government agency. An NRI can also inherit property of another NRI provided the property in question was bought in accordance with the provisions of the foreign exchange law in force at the time of acquisition.

However, a declaration form for acquisition of commercial property for carrying on any industrial, commercial or trading activity by their proprietary / partnership firm in India is required to be filed with RBI within 90 days from date of purchase।

Money can be repatriated abroad if bought with the foreign exchange earned abroad. That too, only in the sale of two residential properties but any number of commercial properties.
NRIs wanting to park their funds in India are taking the real estate market seriously enough to form informal groups to back select projects। Around 25 million NRIs are investing in immovable property in India, but unlike HNIs and financial institutions they are keen to invest in the housing segment, rather than commercial projects.

NRIs tend to invest in residential properties in India, preferably in their native towns or cities where their relatives and friends can supervise such projects। However, funds are now being put into some commercially viable projects as well, such as malls, hotels and office complexes. Around $600 million has poured in from such investments in the last one year, with a single investment from a group averaging between $10 to 15 million.

According to media reports, Law firms are receiving five to six enquiries every week from overseas Indians who club together and float a fund to build a property, stay on through the lock-in period, and sell it at a good profit।

Jaipur, Hyderabad, Vijaywada, Ahmedabad, Baroda and Surat have seen groups of NRIs making such investments in malls, office spaces and residential townships। These investments are generally routed through Mauritius to avail of tax benefits.

It is a win-win situation for both investors and real estate developers. The former earn handsome returns, while for the latter, it’s low-cost credit. Some projects in smaller cities have yielded as much as 50 per cent returns. The rise in interest rates is bound to bring real estate prices down in a few months’ time, and that would be the ideal time for NRIs to strike.

NRI Buying Homes, Properties more Easliy

NRIs are now buying Properties, homes in their very own homeland in more relaxed way than ever for non resident status people abroad. Reasons are RBI relaxed and imroved norms for non resident indians to buy property in India.

1. Reserve Bank of India has spelled out clear norms for NRIs to invest in different kinds of property. NRIs holding Indian passport do not require prior permission of RBI to buy residential or commercial immovable property in India.


2. The purchase consideration may be paid either by remittance of funds from abroad through normal banking channels or out of NRE / FCNR / NRO account.
   
   
3. Money can be repatriated abroad if bought with the foreign exchange earned abroad. That too, only in the sale of two residential properties but any number of commercial properties.

NRI’s of Indian nationality do not require any permission for acquisition, transfer or disposal by way of gift of immovable property which is not a farmhouse or agricultural land or plantations property. Declaration on form IPI 7 for acquisition of commercial property for carrying on any industrial, commercial or trading activity by their proprietary / partnership firm in India is required to be filed with RBI within 90 days from date of purchase.

Mr. NAgarajan, editor of Indian Real Estate says, -

"There is huge demand for professional property management services from the NRI segment which has not been adequately met. “These days NRIs do not trust their relatives and want to outsource this function to professional companies to do the renting, leasing, taking care of the documents, maintenance etc. once this function is addressed, there will be a surge in NRI investments."

This corroborated by Amit Mavi, who markets properties by leading developer group, Unitech. “The NRIs prefer investing what they save in their home country. It is generally a long term investment and not a speculative one. This investment also acts as the vacation home for these NRIs when they come to India and also a home from a long term end user perspective.

Source: Economics Times

South Indian NRI docs head home

An increasingly large number of non-resident Indian doctors is returning home to south India, giving a third leg to the reverse brain drain phenomenon that mostly involved software engineers and corporate scientists.

A trickle of NRI doctors returning home has been there all around the country for decades now (that is how Apollo Hospitals started), but what marks out the present phase is the accelerating pace and the peninsular focus. The latter is only to be expected since more doctors from the south left India in the first place.

"We get enquiries on a daily basis from NRI doctors wanting to come back," says K Hari Prasad, CEO of Apollo Hospitals, Hyderabad.

On an average, Manipal Hospital, Bangalore, gets five to six resumes every week from NRI doctors in the US and UK. Corporate hospitals in Kerala are seeing a similar inflow of applications.

A good 15 per cent of the doctors at the Kerala Institute of Medical Sciences are former NRIs. Wockhardt hospitals have 28 specialists who have returned to India from abroad. Around 15 former NRI specialists are working with Image Hospitals in Hyderabad and they keep receiving enquiries from doctors seeking jobs in the group.

Says A John Punnoose, CEO, Madras Medical Mission, "Around 80 per cent of the doctors at our hospital in Chennai are former NRIs. I receive around two or three applications from NRI doctors every week, which shows that the trend is on the rise."

"Though it is just over a year since Lifeline Hospitals started operations on Chennai's IT corridor,we already have 13 former NRI doctors, making up a good 24 per cent of the total strength," says M Baskaran, chief executive officer, Lifeline Clinics & Multi-Specialty Hospitals.

Why is this happening? There is both a pull and a push factor. Things are changing rapidly for the better in high-value private health care in India and for the worse for doctors in general in the US and NRI doctors in particular in the UK.

As the economy booms, corporate hospitals are mushrooming all over the country. These are bringing in the latest equipment and their practices and standards are increasingly conforming to globally accepted levels, driven partly by the desire to attract medical tourism.

First, the push factor. V K Kamath, CEO, Apollo Hospitals (Bangalore), says the status of doctors in the US is not what it used to be. Doctors, once among the most respected of professionals, are no longer in that category.

The relative salary of doctors in the US today is not very high as compared to the seventies and eighties when, on an average, they earned much more than those in most other professions.

As for the UK, it is the glass ceiling that has prompted many to return to India.

"There is only a certain level to which a non-White can reach in the UK. The glass ceiling starts to act from then on," said Shabeer Ahmed, a laparoscopy surgeon who had been in Britain since the early 1990s and is now with Wockhardt Hospital. "Here I can use my knowledge in laparoscopy to build something big."

Now the pull factor. According to Dr M I Sahadulla, chairman and managing director of Thiruvananthapuram-based Kerala Institute of Medical Sciences, a premier corporate hospital promoted by NRIs based in the Gulf, "In the past, doctors opted to work in UK and US hospitals as they offered better incomes, top-class medical training and greater job satisfaction. With the Indian healthcare scene now ensuring these aspects, NRI doctors are keen to return. The most important phrase for them is job satisfaction, which they know they will get by working in present-day India's healthcare sector."

Source:Business Standard

NRIs Craze for Indian Real Estate

Since the investors making investments in Indian retail sector has become conscious about putting in the volatile equity market at current levels, Non Resident Indians (NRIs) are taking a contrarian stand towards the same.

Nowadays, NRIs seem to be changing their mindset about making investments in Indian real estate. They have invested a whopping 100 crore, in less than two months of the current calendar year. Contrary to this, NRIs had emerged as net buyers at less than Rs 8 crore in 2006. Connoisseurs feel that the corrections witnessed in the past few years have made NRIs bullish on the Indian real estate market. However, they are looking towards reinvesting.

Data complied by surveys clearly show that NRIs have been taking out their money, with the concerns such as high rupee-dollar rate and valuation on mind. All these factors have forced them to reconsider their decision to invest, says the head of brokerage with a sizeable overseas presence.

Although, the value of rupee has increased over the last few months, the corrections witnessed in the equity market have led NRIs to add to their investments, he adds. However, the situation was not the same earlier, when the value of rupee was also appreciating and the equity market was also not flourishing.

Real estate is one sector that NRIs have developed a liking for,” said a research analyst with a domestic brokerage. “Most NRIs from the Gulf region seem to be eternally bullish on the infrastructure sector and ready to invest in any of the real estate companies. In addition, many of the first-time investors also prefer technology stocks,” he added.

Since the past few years, NRIs have shown a large inclination for Indian real estate. But the real craze for Indian property market can be seen among NRIs from the Gulf region, and are willing to invest in any of real estate companies. Also, the increase in foreign direct investment the country is receiving serve as an encouraging factor for most brokerages new-found partiality for the Gulf region.

Source:http://www.nrirealtynews.com/

NRI invest in biggest project of 100-acre condominium complex in Clacutta

NRIs are looking to invest money in real estate india and have put eyes on calcutta.NRI invest in biggest project of 100-acre condominium complex in Clacutta.Uniworld City -New Town's biggest project of 100-acre condominium complex.

-Uniworld City will strive to be the one-of-a-kind worldclass condominium project with 82 apartment blocks of nine to 27 stories.
-The company proposed 4,500 flats to be developed in nine phases that will cost Rs 20-70 lakh.
-Large restaurants with terraces have been suggested for the main plaza to provide an architectural focal point and activate the plaza with outdoor dining areas with 300,000 sq ft of premium built space convenience kiosks, books, music and cafes
-The streets allow for visual connections and easy transitions from private to public areas
-Added wide variety of apartments in terms of the number of bedrooms and area to cater to different choices and budgets.
-Three club houses with modern indoor/outdoor sports and recreational facilities
-A boutique hotel with 120-plus rooms and a five-screen multiplex.

The joint venture is between Delhi’s Unitech group, the South East Asian company-Universal Success and UK-based architects- RMJM . Rs 1,575 crore was pledged by Indonesian Salim-Ciputra combine and Bengal Unitech Universal has announced a whopping Rs 3,000 crore investment in an IT space and residential project at Rajarh.

The following companies inolve in this project as the joint venture to complete this project:

NRI Prasoon Mukherjee of Universal Success Group (South East Asian company) said, “This will be the most extravagant development in this part of the world.

Unitech Universal, Gurgaon entered civil engineering in 1974 and specilize in power transmission lines, highways to theme parks, from steel plants to residential developments and from indoor stadiums to hotels.

Forrec of Canada was commissioned to create the destination retail/entertainment development in the form of a low-height, double-storey sprawl. No other consultant group can equal our track record of 48 major built projects in 20 countries, including: Major Theme Parks, Water Parks, Entertainment Centres, Retail Environments, Hospitality, Gaming , Cultural Attractions and Urban & Resort Planning

RMJM, UK based achitects, is working on the project with the cost of Rs 100-crore. It is one of the world’s leading architects, to design the world-class multi-residential project and IT park. RMJM’s design portfolio includes the award-winning architecture for the Olympic Green Convention Centre which will play a major role in the 2008 Beijing Olympics.

Source:nriinternet

NRI group plans biggest FDI in Indian real estate

A US-based infrastructure company on Thursday unveiled plans to invest $1 billion in Indian real estate in what is being billed as the largest foreign direct investment (FDI) in the newly liberalised sector.

Royal Indian Raj International Corporation (RIRIC), a Nevada-based company promoted by people of Indian origin, is firming up plans to build integrated townships and planned cities in the country.

The company has entered into a strategic partnership with New York-based real estate investment banking firm The Greenwich Group International to finance the development of multiple private cities in India. “We have already been working on our inaugural residential project on a 17-acre plot on the outskirts of Bangalore,” said RIRIC CEO Manoj C Benjamin.

“With the Indian real estate sector in transition and recent landmark legislation allowing FDI into it, the opportunity for participation in this formerly closed market is heightening,” Benjamin said. RIRIC said it aimed to take advantage of India’s immense housing shortage by developing large-scale commercial and residential townships in four megapolises - Bangalore, Mumbai, Kolkata and New Delhi.

The company claimed its plans for the next 10 years in India would provide direct employment to nearly 10,000 people and indirect employment to another 40,000. “We have got into a contract to acquire nearly 5,000 acres of land near Mumbai, 3,000 acres near Delhi, 5,600 acres near Bangalore and another 5,000 acres near Kolkata,” Benjamin claimed. He, however, said the final settlement of these deals depended on several factors - chiefly approvals from state governments.Benjamin said Mumbai alone would need anywhere between 180,000 and 200,000 additional residential units in the next 10 years.

India is expected to see an annual shortfall of 20 million housing units till 2011. The $50 billion Indian real estate market is booming and expected to grow at 25 per cent annually. The boom owing to the consumption powered growth of the country’s economy has seen investors planning nearly 250 new shopping malls by 2008, as against just three that existed till 2002.

The central government adopted a regulation in February allowing foreigners to bid for Indian construction projects with local partners and also reducing their minimum land-holding limit from 100 acres to 25 acres. Enthused by the liberalised investment guidelines, a slew of foreign builders are rushing to launch projects in Asia’s third largest economy.

Source :Hindustantimes

Separate NRI investment cell for Kerala tourism

Steps are underway to set up a separate cell to tap the cash-rich non-resident Keralites (NRKs) for developing Kerala's tourism infrastructure, state Tourism Minister Kodiyeri Balakrishnan said here Tuesday.

"Though the central and state governments are doing their bit to promote tourism in Kerala, this will not be enough for the development of tourism infrastructure. For this we should tap the NRKs and a special cell will be created to this effect," Balakrishnan said in the state assembly.

The minister was replying to questions on the steps taken to promote tourism in Kerala.
He said that an Infrastructure Development Finance Corporation would also be set up to look into tourism infrastructure development.

The minister pointed out that the biggest problem faced by the Kerala tourism industry was shortage of rooms."During the peak season Kerala requires around 20,000 rooms and what we have now are a mere 8,000 rooms," Balakrishnan said.

In 2006, the number of foreign tourists visiting Kerala went up by 23.67 percent over 2005 and touched a record 428,534. In the same period, as many as 6.2 million domestic visitors arrived in the state, up by 5.41 percent from 2005.

Balakrishnan said they would promote home-stays in the state to address the increasing demand for rooms.
"Home stay is one area where we could concentrate because it brings income to all. Kochi is already doing well in this front. A master plan for tourism is also on the anvil and this would cover all the issues of the industry," he added.

The minister further said that tourism would soon be part of the school curriculum and that more tourism educational institutions would also be set up.

Source:manglorean.com

NRIs Woo Real Estate in India

NRIs wanting to park their funds in India are taking the real estate market seriously enough to form informal groups to back select projects. This is the latest trend observed in the Indian realty market, and nobody’s complaining.

NRIs tend to invest in residential properties in India, preferably in their native towns or cities where their relatives and friends can supervise such projects. However, funds are now being put into some commercially viable projects as well, such as malls, hotels and office complexes. Around $600 million has poured in from such investments in the last one year, with a single investment from a group averaging between $10 to 15 million.

Law firms receive 5 to 6 enquiries every week from overseas Indians who club together and float a fund to build a property, stay on through the lock-in period, and sell it at a good profit.
Jaipur, Hyderabad, Vijaywada, Ahmedabad, Baroda and Surat have seen groups of NRIs making such investments in malls, office spaces and residential townships. These investments are generally routed through Mauritius to avail of tax benefits.

It is a win-win situation for both investors and real estate developers. The former earn handsome returns, while for the latter, it’s low-cost credit. Some projects in smaller cities have yielded as much as 50% returns.

Overseas Indians are allowed to make investments in Indian property without any limit on the quantity or the number of investments.There is a huge gap in supply in almost all sectors of property in India. The IT/ITES sector will require a space of 150 million sq. ft by 2010, while 6.7 housing units are currently in short supply. The emerging retail industry will require vast spaces to accommodate the large hypermarkets coming up.

On a more formal scale, capital management companies are being formed overseas by Indians to work with top builders and offer consultancy services to individuals looking for investment in Indian realty. For NRIs, it’s a gold mine waiting to be tapped

Budget: NRI investors get lower returns

More Indians are paying more taxes, the economy is growing at over nine percent, exports are booming and foreign reserves have touched a new record of $180 billion. So Finance Minister P. Chidambaram focused on the poor to lower prices, provide better education and healthcare, offer selected insurance cover and improve infrastructure.

Now that foreign companies are rushing to India and Indian companies are buying out foreign companies, new investment incentives take a back seat. Thus it is no wonder the budget did not have any special provisions to attract NRI investors. However, NRIs, like all Indians, will pay less income tax but also get lower returns on Indian stocks.

NRIs who file income tax returns in India will benefit marginally as the tax exemption has been raised by Rs.10,000 to Rs.110,000; to Rs 145,000 for women and Rs.195,000 for senior citizens. However, the education cess has increased from two percent to three percent on all direct and indirect taxes to finance higher education.

NRIs will get lower returns from their investments in stocks. The budget raised the dividend distribution tax from 12.5 to 15 percent on dividends paid by a domestic company from April 1, 2007. When the education cess of three percent is added, it amounts to over 18 percent. This means the dividend is reduced by over 18 percent on Indian stocks.

Similarly, NRIs investing in a money market mutual fund or a liquid fund would pay 25 percent dividend distribution tax. But not many NRIs invest in these very short-term funds and the return is negligible. NRI tenants occupying any property for commercial use will now have to pay service tax of 12.5 percent. This increases their cost of doing business in India. NRI landlords will not be affected, as they will collect this service tax from their tenants. The budget did not make any provisions for greater individual real estate investment.

To attract NRIs to invest in real estate, the stamp duty should be uniform across the country and reduced considerably. NRIs remit funds through legitimate banking channels and so they are at a disadvantage when the seller demands the majority of the price in cash as the sale price is a fraction of the total price paid for a property. This will bring down, if not stop, cash changing hands when buying and selling property that is commanding steep prices in India today. Since this is not strictly a budgetary provision, the finance minister can issue guidelines to the state governments on this matter. As avid collectors of Indian art, if NRIs sell their art pieces in India, they will have to pay a capital gains tax.

An NRI selling any work of art in India including drawings, paintings, sculptures or archaeological collections will now pay capital gains tax of 20 percent on the net gains or 10 percent on the total price. NRI promoters can enjoy a five-year tax holiday if they invest in economy hotels and convention centres in and around Delhi provided that these facilities are completed before March 2010 in time for the Commonwealth Games in the capital. NRI financiers of venture capital funds in India enjoyed tax benefits known as Pass Through Status for all knowledge-intensive ventures. Now the NRI promoters of these venture capital funds will get tax exemptions only in "truly deserving" ventures such as in biotechnology, IT relating to hardware and software development, nanotechnology, seed research and development, research and development of new chemical entities in the pharmaceutical sector, dairy industry, poultry industry and production of bio-fuels.

NRI promoters may also be taxed depending on their country of residence and its tax treaties with India. If an NRI takes over an infrastructure company through merger or acquisition, he/she will lose the exemption benefit granted earlier. In addition to their bank accounts in major cities with major banks, NRIs can now open NRE/FCNR deposit accounts in selected foreign currencies or in rupees with Regional Rural Banks that are making good progress. NRIs can heave a sigh of relief that their cash withdrawals under Rs.50,000 will not be notified to the authorities. To keep track of cash transactions and 'black money', a banking cash transaction tax was introduced last year for all cash withdrawals above Rs.25,000 and these transactions were reported to the Financial Intelligence Unit.

This led the Income Tax Department to many money-laundering and 'hawala' transactions. This year, the limit of withdrawals has been raised to Rs.50,000. The budget follows the old saying, "If it's working, don't fix it". India is progressing well so the poor should benefit. And NRIs are welcome to contribute - without VIP treatment.

Source:indiatimes