Who can buy property in India?

The eligibility criteria for non-residents to buy property in India are governed by specific guidelines and conditions. Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), and foreign nationals holding Overseas Citizen of India (OCI) cards are permitted to purchase residential and commercial properties. However, they are prohibited from buying agricultural land, plantations, or farmhouses.

Residency plays a key role: foreign nationals are only allowed to buy property if they have resided in India for at least 182 days during a financial year (a tourist visa lasts for 180 days). It is also illegal to buy property on a tourist visa. Foreign nationals from certain countries, such as Pakistan, Bangladesh, and China, must obtain prior approval from the Reserve Bank of India (RBI) to acquire or transfer immovable property.

An important aspect is the OCI Scheme, which was introduced in August 2005. This scheme allows overseas citizens to invest in real estate but with the same restrictions as NRIs regarding agricultural properties. Foreign nationals who reside outside India can only inherit property, and any subsequent transactions involving that property would require prior approval from the Reserve Bank of India (RBI).

Do the research

Investing in Indian real estate is appealing due to the country’s rapid urbanization, economic growth, and increasing demand for housing and commercial spaces. With a young, growing population and expanding middle class, the real estate market in cities like Mumbai, Bengaluru, and Delhi continues to show strong potential for long-term capital appreciation. India’s real estate sector benefits from government initiatives such as affordable housing schemes, smart city projects, and reforms like the Real Estate (Regulation and Development) Act (RERA), which ensures greater transparency and accountability.

India's growing IT and industrial sectors also contribute to rising demand for office spaces and commercial properties, while the rental market remains strong in metro areas with high migrant populations. The diversification of investment opportunities, from affordable homes to luxury properties and commercial real estate, offers varied entry points for investors. With ongoing infrastructure development and increased foreign direct investment in real estate, India presents a dynamic market with the potential for significant returns over time.

Below are some sought-after destinations for real estate investment in India:

• Mumbai - As India's financial capital, Mumbai is a prime location for both residential and commercial real estate. Key areas like South Mumbai, Bandra, and Andheri are particularly popular for their modern infrastructure, premium amenities, and central locations. Mumbai offers a range of luxury apartments, making it a top choice for high-end investors.
• Delhi NCR - Delhi and its surrounding National Capital Region (NCR), including Gurgaon and Noida, are known for their booming real estate market. Areas like South Delhi, Golf Course Road in Gurgaon, and Noida Extension offer excellent opportunities for residential, commercial, and mixed-use properties. Investors are drawn by the region's infrastructure, proximity to key business hubs, and strong rental market.
• Bangalore - Bangalore, often called the "Silicon Valley of India," is a technology hub that attracts professionals from across the globe. Areas like Whitefield, Koramangala, and Hebbal are hotspots for luxury apartments, villas, and commercial properties. Bangalore’s growing tech industry and cosmopolitan atmosphere make it an ideal location for real estate investment.
• Goa - Known for its beautiful beaches and relaxed lifestyle, Goa is a popular destination for holiday homes and second-home buyers. Areas like North Goa (Calangute, Candolim) and South Goa (Palolem, Colva) offer attractive investment options, from beachfront villas to boutique hotels. Goa's appeal as a tourism hub ensures steady demand for rental properties.
• Hyderabad - Hyderabad's IT sector, combined with its relatively affordable property prices, has made it an emerging hotspot for real estate investment. Key areas like Gachibowli, HITEC City, and Banjara Hills offer a range of residential and commercial properties. Hyderabad's infrastructure development and growing business opportunities continue to attract investors.
• Chennai - Chennai, known for its thriving automobile and IT industries, is an important business hub in South India. Areas like OMR (Old Mahabalipuram Road), Anna Nagar, and Adyar offer lucrative real estate opportunities. The city’s stable growth and coastal location provide diverse investment possibilities, from residential apartments to commercial spaces.
• Kochi - Kochi, often called the "Gateway to Kerala," is a fast-growing port city with increasing real estate potential. Areas like Marine Drive, Kakkanad, and Vyttila are popular among investors looking for waterfront properties or commercial real estate opportunities. Kochi’s connectivity and trade potential make it a key location for real estate.
• Pune - Pune, known for its educational institutions and growing IT industry, is a popular destination for young professionals and families. Areas like Koregaon Park, Baner, and Kalyani Nagar offer excellent options for both residential and commercial investment. The city's balanced lifestyle and proximity to Mumbai make it a desirable location.

Where to find properties online:

• https://www.makaan.com/
• https://www.99acres.com/
• https://www.magicbricks.com/

Financing

Several Indian banks provide home loans to Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs), subject to certain eligibility criteria such as income, age, and credit history. Typically, banks offer up to 80% of the property value as a loan, depending on the borrower’s financial profile and the bank’s policies. Interest rates for NRI home loans generally start from around 7% per annum, though they can vary based on the lender and the loan tenure. Additionally, most banks require that the loan be repaid through Non-Resident External (NRE) or Non-Resident Ordinary (NRO) accounts.

Due Diligence and Sales Contract 

Conducting thorough due diligence is essential for investors and buyers to steer clear of legal complications, financial risks, and fraudulent dealings. It offers a comprehensive assessment of the property's legal status, ownership history, and potential for future growth, thus safeguarding the buyer's interests. This process involves verifying the property's title, checking for any existing encumbrances or pending legal disputes, ensuring compliance with local zoning laws, and reviewing necessary approvals from local authorities.

In India, the property sales contract, commonly referred to as the "Agreement for Sale" or "Sale Deed," is a legally binding document that outlines the terms and conditions agreed upon by both the buyer and the seller. This contract includes essential details such as the purchase price, payment terms, deposit amount (often around 10% of the property's value), and specific information about the property, including fixtures, amenities, and any inclusions. Once both parties sign the agreement, it becomes legally binding.

Property Buying Costs and Taxes in India

Footnotes to Transaction Costs Table

The round trip transaction costs include all costs of buying and then re-selling a property - lawyers' fees, notaries' fees, registration fees, taxes, agents' fees, etc.

Currency
India uses the Indian Rupee. The exchange rate is at US$1=INR84.0771 as of 22nd October 2024.

Stamp Duty
Stamp duty is payable on property transfers. Stamp duty rates vary from 4% to 10%, depending on the location of the property.

Registration Fee
Registration fees are around 1% of the property value. Registration fees vary, depending on the location of the property.

Legal Fee
Legal fees are typically around 1.5% of the property value.