Persons of Indian Origin > Real Estate

Real estate sector in India is booming. Research indicates an unprecedented growth in the Indian Real Estate market from the current US$ 14 billion to US$ 102 billion in the next 10 years. The global real-estate consulting group Knight Frank has ranked India 5th in the list of 30 emerging retail markets.

Favourable reforms initiated by the government in real estate coupled with higher disposable income and increasing purchasing power are responsible for the real estate boom in India. Further aiding these are easy housing loan options from customer banks and housing finance companies, lower EMIs and rebates under the income tax act.

Indianequitymaster.com provides a Person of Indian Origin (PIO) with transparent and credible real estate solutions to capitalize on the boom in the Real Estate market of India. We help individuals and families investing in Plots, Buildings and even fixed return real estate investments in India. We work with agents all around India to meet the investment goals of the client. At Indianequitymaster.com we believe that diversification of investments is key to a good financial portfolio and real estate is an excellent investment option for investors.

 We provide an array of services, some of which are market research and analysis, land identification, entry and exit strategy and documentation preparation.

Persons of Indian Origin

There are no restrictions on the kind of investment that Persons of Indian Origin (holding PIO card ) can make in Indian real estate. There are various types of investments that can be made.

1. Regular commercial or residential investment wherein an investor purchases a property that is constructed / under construction and is vacant.

2. An investment where the property purchased is already leased out and hence provides an immediate return on investment. The yields for residential property are typically lower than those for commercial properties. Residential properties offer a yield of around 4% to 5% per annum while commercial properties are in the range of 7% to 12% depending on location, type of construction, developer, tenant etc.

3. Agricultural land – The idea behind this kind of investment is to acquire agricultural land, get a Change of Land Use (CLU) to say, residential, and then sell the land to a developer. The jump in land value is substantial once the conversion is made. However, only investors who wish to be actively involved with their investment and have a big appetite for risk should make this kind of investment. Both stages – acquiring the land and getting the CLU are very time consuming and are very uncertain especially for someone not well versed with the Indian real estate market at the rural level.

4. Another investment option is what is referred to as the "assured return" method. This method is used to invest in properties that are under construction or are about to start being constructed.

As per this method, a developer will offer an investor a return on any funds the investor wishes to invest in the developer's project. Assume that for a proposed commercial building the return offered is x% per annum and the investor wishes to invest $100. In this case the developer will pay the investor x% on $100 till such time that the investor's space (worth $100) in the building gets leased. Typically, this would mean that for the 18 months the building is under construction the developer will be paying "rent" for the investor's space. Moreover, the developer is contractually bound to find a tenant for the investor once the building is ready and ensure that the rent the tenant pays for the space will maintain a return of x% to the investor. It is also in the developer's interest to find a tenant as soon as possible because, as mentioned earlier, the developer will have to keep paying the investor the x% return till a tenant moves into the space.

This method is usually used for commercial properties and the yield on these options is typically 1% to 2% higher than what an investor would expect from a similar property if it was operational and had a tenant.

5. Another way to invest in the Indian real market would be through one of the domestic or foreign real estate funds (a new concept for Indian real estate) that are setting up in India. These are venture capital funds that aim to provide investors with IRRs of around 25% - 30%. The same rules for FDI apply to foreign funds while there are no such restrictions on domestic funds.