Investing abroad in Realty

Real Estate being a popular instrument of investment for Indians, it’s little wonder that Indians are investing in realty outside the country. For one, it gives better returns when the sale is made during a low rupee, for another, it can make way for citizenship in that country.

The RBI has also been relaxing restrictions for Indians investing in realty abroad. One can invest a maximum of USD 200,000 in a year on any instrument abroad, out of which, as much as USD 125,000 can be invested in realty.

That Indians are making the most of this, is no surprise. In 2013-2014, Indians invested a whopping USD 5.8 billion on realty in the US, with the most popular destinations beinginvesting New York, Chicago, Dallas, Los Angeles and Las Vegas. After US, UK, Singapore and Malaysia are equally popular with realty investors. SAARC countries like Mauritius, Bhutan and SriLanka which are popular tourist destinations are also on the radar.

However, before one plunges into any realty deal abroad, it’s good to know a few things:

  • Suburbs are surely more cost-effective, but one must investigate its appreciation potential.
  • Neighborhoods make a big difference to rent and sale values. Ensure that the neighborhood within in a radius of 3 miles from your desired property is fairly good.
  • Needless to say, the property must not be too old, must be free of litigation and have clear titles.
  • It’s also better to invest in property owned by institutional investors rather than individual property owners.
  • It’s better to have joint ventures with local citizens, as against going solo.

Buying realty in a foreign country is a great option. But one must be aware of legal loopholes, regulatory controls, and procedural hassles in any destination, before investing there.

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Documents to examine before buying property

Purchasing property in India can be complex and unfortunately prone to fraud and deception quite often. That is why, the state and central governments, property experts, and lawyers specializing in Realty advise buyers to peruse all documents thoroughly with the help of a lawyer, before buying property.

Some of the things buyers must look out for:

  • Original Land Deed of Current Owner: Always insist on seeing the original title deed of the property to ascertain ownership details and rights to sell. Photocopies are not examinereliable as information on bank loans taken, or multiple ownership cannot be ascertained easily. A visit to the concerned sub-registrar’s office can help ensure titles are indeed in the name of the current owner who is the seller.
  • FIR of theft: In case seller gives the excuse that the originals have been stolen, ask for the FIR copy of complaint lodged. Once satisfied, place an ad in the newspaper mentioning the desire to purchase, to weed out objections from any quarters.
  • Release certificate from Bank in case of loans: In case loans have been procured in the past on the property, request for Release certificate from all the banks concerned and validate the same from the concerned bank(s).
  • An Encumbrance Certificate from the Sub-registrar’s office: This ensures no legal hassles or unpaid dues are involved in the property. This can be purchased from the concerned sub-registrar’s office.
  • Original property tax receipt for the plot, for the built property, as well as water and electricity bills paid must be provided to ensure there are no pending municipal dues which can become the liability of the buyer.

Remember, the Indian law provides adequate checks and controls to prevent fraudulent land deals. It’s the prerogative of the buyer to employ them and ensure a clean deal.

Luxury Projects: Luxury by what standards?

A recent and amusing trend in Indian realty is how every other project is touted as a ‘Luxury’ or ‘High-end’ project. While one can appreciate the marketing hyperbole, as a home buyer, it’s important to know what really qualifies as a Luxury project. Experts in the Realty business provide a few pointers:

  • Location: The project should be located in an upscale neighborhood with excellent connectivity, wide roads, be free of any slum, have a low crime profile, and luxury-bhkreasonably good public and social infrastructure.
  • Space: The project should have abundant open spaces, and a low floor-area-ratio. A general thumb rule is that there should not be more than 100 or 150 units in an acre of land.
  • Number of Units: Irrespective of the above thumb rule, the lesser number of units in the project, the better, as this implies less crowding, less demand on and hence better availability of common amenities.
  • Amenities & Facilities: While every project has a gym and clubhouse today, it’s the additional, new and innovative features that distinguish a luxury project from an average one.
  • Interiors: The quality of fittings and fixtures used; the materials and finishes used for floors, walls, ceilings etc, make a huge difference and qualifies a project as a luxury one. Also, the floor-to-ceiling height should be 12 feet and above for that classy and imperial look.
  • Security: How sophisticated, high-tech, and prepared is the security staff, is a big differentiator. Feeling ‘extremely secure’ should be the minimum requirement in a luxury project. 

Other factors like builder’s experience with luxury projects also make a difference. As a buyer, do your due diligence and be the real judge of what is or is not ‘luxury’, before investing in such a project.

Integrated Townships or Independent Projects?

The concept of townships is as old as industrialization in India. Large corporate houses like Tatas, Birlas, Ambanis and JIndals built self-sustained colonies or townships around their plants.

In more recent times, Realty houses are promoting ‘integrated townships’ in a big way. townshipThese self-sustaining localities or satellite towns come with all the necessary amenities required for a good quality life. The Indian Government is also incentivizing Realty houses who would like to create townships, making it the most prominent trend in the years to come.

But what does it mean to an average home-buyer? Is buying a home in an integrated township a better option vis-à-vis an independent apartment / villa / villament / plotted development project?

Benefits of living in an Integrated Township

  1. Much better infrastructure like roads, power, water, and sewerage connections compared to the parent city.
  2. More standardization in construction, and hence better overall ambience in the township.
  3. Reduced need for transit to the parent city, as these townships are replete with schools, colleges, shopping and entertainment destinations.
  4. More cost-effective, as these townships are built on the peripheries of cities, where land-parcels are purchased in bulk, and development undertaken by a few builders only to keep costs low.
  5. Less crowding, and hence less traffic or pollution related issues

Downside to buying a home in a township

  1. Plot owners are bound by architectural restrictions while building their homes here
  2. Maintenance can be an expensive affair if the township’s Management maintains amenities like sewerage and street lights.
  3. Construction cycles are longer

Townships offer distinct advantages and are the ideal solution for India’s overcrowding and massive urban migration issues. As a buyer, one must choose the desired township after doing due diligence, if one must enjoy the dividends from investing in a township, for a long time.

Things to keep in mind while renting out your property

With real estate becoming the most preferred form of investment, it’s common to find people owning two properties, one of which is rented out. This provides both short-term and long-term gains to the owner. However, it’s important to bear a few things in mind while renting out your property.

  1. Fixing the Rent Amount: It’s easy to ascertain rent value for flats in an apartment complex, although flats in good condition and semi-furnished flats can command a premium. For independent houses, research the neighborhood thoroughly to arrive rentingat the optimum rent.
  2. Advertizing the vacancy: While spreading word-of-mouth and having a ‘To let’ board on the property are time-honored methods, it’s better to advertize on online property portals to reach a wider audience and have more options for tenants.
  3. Background verification of the tenant: Unlike the past, a Police Verification of the prospective tenant is mandatory in most states. One could download the form from the internet, fill it out and submit it to the Police station under jurisdiction.
  4. Creating a Lease/Rent Agreement: It’s important to have a rent/lease agreement that clearly spells out dimensions and details of the property including fixtures, furniture and fittings, as well as the rent amount. One could add terms and conditions for rent payment as well as penalty clauses for delays, and damages to the property.
  5. Registering the Agreement: Registering an agreement makes it legally enforceable, and is mandatory in case the term of the lease is more than 11 months.

 Remember, a home is one of those few assets that appreciate with time. Follow the above process and you can ensure you have the right kind of tenants who will maintain the home well and pay the rent on time.

Sample Flats: How useful are they?

Sample flats are a marketing tool employed by builders. While these can give a hint on how the flat will look, one cannot make a purchase decision based on that.

  • Location: The best location in the project is chosen for the mock flat so that it overlooks gardens, swimming pools, neighboring projects, highways etc, while the real flat may overlook another block or a boundary wall.Sample Flat
  • Dimension: A large area is chosen for the mock flat while one’s purchased flat may have smaller dimensions. Consult the desired flat’s plan to get a better idea.
  • Walls: The walls are made of 2-inch half-bricks or plywood sheets or gypsum boards, which increases the space within the flat. Walls in the purchased flat will be thicker.
  • Ceilings: The ceiling is set higher than what one actually gets in the purchased flat, to increase the feeling of space.
  • Flooring: High-end and expensive wooden flooring is used in the mock flat. Whereas home buyers generally compromise on the brand or variety of wooden floor to keep costs low.
  • Doors: Doors are not fitted in all the enclosures which again heighten the roomy feeling.
  • Balconies: Larger balconies and more balconies are added to the mock flat to create a positive effect that triggers a ‘yes’ decision.
  • Furniture: Expensive furniture that is smaller than what are generally available is used, to create a luxurious and roomy feeling. Real-life furniture can be larger and occupy more space.
  • Cabinets: Cabinets in kitchens; and wardrobes in rooms are designed for less depth – once again to increase the spacious feel.

Builders have the right to market their projects using various tools. Home buyers should appreciate that, and factor in everything before making a purchase decision.

Investment Guide: The 5 Best Indian Cities For Buying Your Dream Home Now

A new professional project, a new career gig or a family concern; you may have any one of these reasons on your agenda that can coax you to change your abode. And what could be better than making out a decision to buy a home of your dreams. India is composed of a good number of cities and not all are good enough to fetch your interest for a big fat realty asset investment. However, there are surprisingly 5 major yet culturally toned down cities where you can definitely make a pitch.

The following list will definitely appeal to those who are planning to have a place of their own in some of the developed Indian localities. Here is a comprehensive list for you along with normal living conditions that everyone should take note of:

  1. Embrace the Age-Old ‘Qutub Shahi’; Hyderabad

Capital of Andhra Pradesh, Hyderabad is famous for its culture, biryanis and the Charminaar. However, the city has now come out of its cocoon and is now one of the fast becoming next IT cities of India. Apart from offering places that are replete with glimpse of age-old heritage, the city is also abundant with job opportunities for technology professionals, predominantly. The real estate arena understands the movement of people for work here and thus is giving out a slew of accommodation options that are fitted with modern amenities and tagged with best prices. Wouldn’t it be nice to breathe in the cultural airs of Hyderabad?

  1. Get The Glimpse of the ‘Colonial Era’; Chennai

Initially regarded as ‘Madras’, this Indian city has now been christened, Chennai. The south based city has everything that a modern Indian can ask for. Chennai has a mixed populace and delightful cuisine for your foodies from all parts of the country. There are beautiful sea beaches and coasts for you to unwind and then on the other side, there are commercial zones to get doused in the modern life style. The most important aspect that you should be aware of is that the city has the lowest crime rate and the most of the localities are safe for women. Thus, it can be easily said that a home in Chennai can be the best deal of your life.

  1. The City of ‘High Energy Buzz’; Bangalore

The electronic city of India is known for its IT hubs, commercial complexes, developed roads and enthusiastic populace. Known to have a high net migration rate, the industrialization has caused people from different places to come for work here and finally settle down here. The fact has been very well utilized by realtors and thus you can expect a slew of luxurious as well as affordable housing options for you. The city has a beautiful climate and an energized moving crowd that will capture your attention and will make a place in your heart in no time. If you are someone who is keen on buying a home in Bangalore then go for it at this moment itself.

  1. The Mishti Kolkata

Kolkata is a dynamic city and is famous for its food, culture and of course the people. The city has seen a lot of ups and downs and has finally managed to get an infrastructural makeover that even the nation bows down to. Characterized by a humid weather, Kolkata is a place where if you plan to reside in your own place; you will never fall short of excitement and liveliness in your life. The populace is mixed here but majority will be of Bengalis. The reason is that the city is a blend of developed and developing areas and therefore, you can have an accommodation at a very good price. Kolkata is nowadays fiercely approached by some of the big players in the realty market.

  1. ‘Punya-Nagari’ of India; Pune

Pune is the ‘dark horse of India’. The reason being is because the city has achieved the present stature in no time and all its success has been well masked by the influential Mumbai. Pune’s success on the economic grounds surprised one and all. If you are planning to invest in an asset in here, then go for it as there are a number of residential as well as commercial projects for you to invest. Speaking on the basis of facts, Pune is one of the favorable places for both common men as well as for the business owners out there.

Few Words Before We Go…

India is growing economically strong with each passing quarter. Each and every constituting city here is also moving on the path of development with ample scope for people to prosper and live merrily. Moreover, the advent of FDIs and incorporation of REITs in India now has paved way for better investment practices and excellent realty assets.

Author Bio

Vineeta Tiwari is a keen writer on Global Economy and Realty market. She has written articles on Global realty market and ongoing trends and tips for investors. An ardent reader, she is happy to pen down research based write-ups for global audience. Currently, she is professionally associated with popular realty portal, 99acres.com.