India and the global property investor

A global investor meets Indian property in three forms: a flat bought in a personal name, a share in a company or a fund that holds buildings, and a listed REIT unit. The rules differ. The marketing often treats them as one.

The personal purchase

FEMA 21(R) of 26 March 2018 allows an NRI — a citizen of India resident outside India — or an OCI cardholder resident outside India to acquire immovable property other than agricultural land, a farmhouse or plantation property. Payment goes through banking channels the regulation permits. Currency notes do not qualify. Other non-residents are on another clause of the same instrument and should be read there, not folded into the NRI sentence. Inheritance is its own route. Later amendments, if the consolidated direction contains them, prevail over a summary.

Stamp duty is a state tax. Registration is local. Delhi, Gurugram and Noida can be one commute and three duty regimes. A lawyer who does not also sell the unit is the ordinary precaution. GRIP does not print a duty rate, because the rate is amended by the state and the rate on a webpage from last year is how mistakes are made.

The project and the portfolio

The Real Estate (Regulation and Development) Act, 2016 puts promoters and agents on a state register above stated thresholds. A registration number, a promised completion date and an occupation certificate are three stages. Home loans, where a buyer uses one, are rupee loans from Indian lenders. A foreign-currency mortgage against an Indian flat is uncommon.

Holding the building through a company imports company law, tax and, where it applies, foreign-investment policy. That can be the right structure. It still has to respect the bar on agricultural land. Listed REITs under SEBI’s 2014 regulations are a third route: a tradeable claim on completed, rent-earning property, with the asset list in the offer document. No yield is stated here. A yield that ignores the leverage, the related parties and the vacancy is marketing.

The investor’s real work is the city. Mumbai’s redevelopment, Bengaluru’s hiring cycle and the NCR’s three title systems are the markets. The statute decides whether the investor is allowed to buy.