Property Buying in India's Real Estate Market Today

When one considers the vast size and scale of India, it is perhaps a little surprising that it has not yet fully emerged as an economic powerhouse; as well as attracting more interest from overseas property investors. India is one of the BRIC countries, along with Brazil, Russia and China, the four economies that are predicted to provide the most substantial economic growth in the world in the next few years. Add to this the fact that India is home to the largest company in the world (by numbers of people employed); has carved itself a niche in the IT services sector; and has the people and resources to continue growing, and it makes an attractive investment proposition.

Part of the reason that India has not made more of an impact on the international property scene is the fact that property ownership laws are far more restrictive than in most other countries. Whereas elsewhere it is often enough to set up a bank account and tax status in order to buy a property, in India you must be either a Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) in order to buy.

The FERA (Foreign Exchange Regulations Act), 1973 states that those 'who are not citizens of India (whether resident in India or not) and companies (other than banking companies) which are not incorporated under any law in force in India are required to obtain prior permission of Reserve Bank to acquire, hold, transfer or dispose of by sale, mortgage, lease, gift, settlement or otherwise any immovable property situated in India.' In practical terms, this means that unless a buyer is resident in India, they must have the permission of the Reserve Bank of India (RBI).

The rights to buy property in India are reserved for certain groups that qualify, but for a foreign national is it illegal to own property unless they satisfy the residency requirement of 183 days in a financial year. Tourist visas last for 180 days, so it is also impossible to buy a property on a tourist visa.

Buyers who are able to find their way through the buying regulations have the option to buy along the 7,000km of coastline that has made India so popular with travellers since the 1960s, or to make an investment in one of the fast-growing cities that service the IT sector. While it can be argued that the major growth in New Delhi has already taken place, the 'second-tier' cities of Bangalore, Chennai, Jaipur, Hyderabad and Mumbai are seeing huge growth. By 2015 it is predicted that a further 2.9 million Indians will be employed in the IT services sector, the majority of whom should be earning a wage well above the average for the country. All of these newly-rich workers will need places to live in the cities, and this is fuelling the building boom in regional cities across India.