As Govt Eyes More NRI Investment In Realty, Lessons It Can Learn From These Cities  

Land Department's data show that Indians invested Arab Emirates Dirham (AEB) 13 billion (approximately Rs 23,400 crore, calculating one Dirham equal to Rs 18) in real estate markets in the city in the first nine months of the calendar year 2015. Also, by investing AEB 5.2 billion (approximately Rs 9,360 crore), Non-Resident Indians (NRIs) topped the list of non-Arab expatriate buyers in the third quarter. Studies also show that ultra-high net worth Indians and NRIs also invest greatly in London and New York.

As the government pushes to attract more NRI investments in Indian real estate, a look at what we can learn from the cities which attract such investments the most:

Dubai

Investing in Dubai real estate is fairly easy, as the city does not place many barriers before investors. In stark contrast to the procedure in India, where the bureaucratic process is tedious and time-consuming, the paperwork involved in the process in Dubai is minimal. Further, by investing over AEB 5,00,000 (Rs 90 lakh), you can also be eligible for a residency visa. As regulatory costs are lower, property in Dubai is less expensive per square foot, when compared to property in cities such as Delhi and Mumbai. Rental norms in Dubai, too, are skewed in favour of property owners, who find it easier to earn from renting out property.

Another major reason why Dubai is a favourite among investors is its tax-free regime, which allows property owners to enjoy a larger share of what they have earned. When compared to New York or London, property in Dubai is cheaper.

New York

Investing in real estate in New York is beneficial in many ways. If you invest $5,00,000 (in some cases $10,00,000), you can apply for a Green Card. New York City also allows companies to raise money from foreign investors, as long as they hire 10 local employees. This is a prospect that many real estate developers find lucrative. In New York, the floor space index (FSI, or the ratio of the floor area to the size of the plot) is 15 in the densest parts of the city. This allows greater real estate development. In large Indian cities, FSI ranges between one and two, and this makes prime real estate in Delhi and Mumbai almost as expensive of that of New York or London. This is a reason why NRIs prefer to invest in New York, because the construction quality and amenities there are better. Moreover, the rental yield is higher than in Indian cities. Despite being heavily regulated, New York's rental markets norms are not as stringent as in Mumbai or other large Indian cities. It is also easier to evict tenants.

London

With all its charms and security it offers, London real estate attracts wealthy citizens from across the world. The real estate fundamentals in London are stronger, as the British capital offers a great infrastructure, amenities, open spaces and parks. After the financial crisis in 2007-08, NRIs have been investing more in property in London, expecting prices appreciation in future. Another reason why NRIs prefer to buy property in London is because when compared to its value, it is reasonably priced. When compared to India, property tenure in London is more secure.