A number of corporate developers are now undertaking land development projects. I intend investing in such projects. Are NRIs eligible for plot loans and what are the terms and conditions.
Yes. NRIs and PIOs are eligible for plot loans. The lending rate may be slightly higher than those available for buying homes which is 10.15 per cent per annum now. The rate of interest for plot loans varies depending on the institution and repayment period. Some institutions provide 75 per cent of the cost of the plot as loan for a 15-year repayment period. A few institutions may insist that a house should be built on the plot within the prescribed period.
Due to current market slowdown and the need to raise working capital, even listed developers have resorted to land development projects as the sales realisation is much faster than in other categories of real estate. As they provide value added services, plot prices are higher than those offered by other land developers.
I bought residential and commercial properties using local funds while in India. A portion of them have been gifted to my relative who is living in Gulf.
The Reserve Bank of India (RBI) has allowed authorised dealers of foreign exchange to permit repatriation even in respect of properties which were not acquired with foreign funds but held by NRIs in India either by inheritance or gift. Repatriation of sale proceeds of such properties is permitted out of NRO account of an amount upto $1 million per financial year subject to the payment of applicable taxes in India.
A foreign national resident in India does not require approval from the Reserve Bank as per FEMA regulations. But approvals, if any, required in terms of regulations prescribed by other authorities such as the concerned state government, etc. will have to be taken by him. However, a foreign national resident in India who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan requires specific prior approval from Reserve Bank of India.
Notes: Mumbai Lures
Institutional investments and capital market transactions in the Indian realty market during the first nine months of the year stood at approximately US$ 4.5 billion.
Out of this, land and development stage transactions attracted the highest quantum of investments (nearly 60%) from domestic as well as foreign entities during the period, indicating perhaps a significant amount of investment in Greenfield and Brownfield development.
The commercial office segment, meanwhile, attracted more than 20% of this total investment amount during the period in question, according to international property consultants CBRE.
In terms of investment locations, Mumbai’s realty market attracted the highest investment, followed by Delhi and Bangalore.
In terms of total real estate investments made in Mumbai and Delhi during the period, land and development stage transactions spelt nearly 70% and more than 60% of total realty investments in the cities, respectively. In the case of Bangalore, more than 50% of total investments during the period were attracted by the commercial office segment.
Axis Bank Loan
Axis Bank has launched a 20-year home loan scheme at a fixed rate of 10.40 per cent for loans of up to Rs5 million. The limited period offer is only for affordable housing segment for loan size of up to Rs5 million.
The new offer is 25 bps, or 0.25 per cent, above its base rate (below which it cannot lend), currently pegged at 10.15 per cent.
The bank customers can also switch from fixed to a floating interest rate plan by paying a fee or go for a foreclosure at fee of 2 per cent of the outstanding principal amount, he said.
