• A reliable agri-company in our network has arranged 500 acres of farm land in India at only Rs 1.45 lakh/acre (very attractive land price and offer available only  till land supply lasts).
• The company is founded and run by professionals with IIT/IIM background with international business experience, who are using their professional management experience in the area of farming and land development, which can give better returns than other investments.
• The company has aboout 600 acres under management, and plans to have 2000+ acres in a couple of years.
• The lands are in central India (contact for exact location details), where the company has a strong presence and experience in organized farming. Investors from different locations have already bought the land here, because the farming operations are managed by the company. So your location does not matter.
• These well managed farm land will give tax free annual income, while giving steady capital appreciation.
• The previous farm lands purchases have appreciated over 300% in last 5 years, and have proved to be the best investment in our portfolio.
• For those who don’t want agri risk, the company is offering fixed Annual Income of Rs 10,000/acre (tax free) - that’s like 8% dividend yield on a solid asset with a potential to grow 20% per annum over next 5-10 years going by how land prices in India have increased in the past, and the big demand-supply gap for food products in India due to rising population and rising income levels but lagging agri production and lack of large scale organized farming.
• Therefore, many professionals and investors have already invested in farm land using this opportunity.

Farm Land Prices (as of 22 November 2011)
Rs 1.25 lakh per acre — 250 acres  arranged (SOLD OUT)
Rs 1.45 lakh per acre — 250 acres arranged (60 acres booked)
Rs 1.95 lakh per acre — 130 acres arranged  (25 acres booked)
Rs 2.45 lakh per acre — 110 acres arranged

All lands are good agriculture land for sale, and have been checked for soil quality. The higher priced lands closer to state or national highways.  All lands have equal capability to generate tax free agri income, and appreciate steadily in the coming years.

If you are interested, please submit your inquiry using the comment form below. Please include your correct email id and phone number. We will mail you back with all the details, and you can then speak with the company’s representatives and also visit the farm lands as part of the land purchase/registration process.

Answer: Yes, NRIs buy commercial real estate/property in India. Under the general permission granted by the Reserve Bank of India (RBI), NRIs can buy/acquire property other than agricultural land/farm house/plantation property, provided the purchase consideration is met either out of inward remittances in foreign exchange through normal banking channels,or out of funds from the purchaser’s NRE/FCNR accounts maintained with banks in India and a declaration is submitted to the Central Office of Reserve Bank in form IPI 7 within a period of 90 days from the date of purchase of the property/final payment of purchase consideration.

You have to understand from where the Govt/RBI is coming. The country’s core assets like agricultural land has to be protected from large amounts of foreign capital acquiring large chunks of such land. RBI has no problems for buying regular commercial property in cities. As an NRI, your best bet will be to buy commercial property in India from reputed developers like DLF, IndiaBulls Real Estate, Orbit Corp, Marathon Nextgen etc.

There has been sales slowdown across all real estate asset classes: Residential, Commercial, SEZ/Industry Parks.

Demand in real estate has remained grim, primarily due to low consumer confidence. This can be attributed to a weak economic scenario. High levels of inflation led to the government increasing interest rates. This led to the drying up of liquidity available for businesses to expand, leading to a slowdown in the commercial real estate demand. The increase in the cost of finance also led to a drop in residential real estate demand.

According to a report released by UBS Investment Research in April 2009, unsold inventory with developers in major residential real estate destinations in India is still high at around 18% of the properties being promised for delivery over the next 12 months.

The inventory situation is not limited to the residential space. Recent data from Jones Lang Lasalle REIS on supply and vacancy for office space in Delhi and Mumbai indicates that office vacancy rates are very high. However, analysts and industry experts believe that long term prospects of the Indian real estate sector remain promising.

According to ASSOCHAM, the Indian domestic real estate market is estimated to be approximately USD 15 billion, of which FDI contributions are expected to be less than USD 4 billion.

The share of FDI in real estate is expected to increase manifold in the coming years with the gradual relaxation of ceiling in construction space permitted to foreign investors.

India’s growing young population, rapid urbanization, growth in industry and services and rapid development of tourism are factors that will propel real estate demand in the long term.

A number of reforms introduced by the Government in recent years have contributed to the scorching pace of development of the Indian Real Estate Industry in the past and will facilitate future growth. These real estate reforms include:

• Repealing the Urban Land (Ceiling and Regulation) Act, 1976 by a large number of Indian States
• Allowing FDI upto 51% in single brand retail outlets and 100% in cash and carry
• In April 2008, the Securities and Exchange Board of India (SEBI) announced amendments to the SEBI (Mutual Funds)
• Regulations 1996 permitting the launch of Real Estate Mutual Funds (REMFs) in India. REMFs are required to invest at least 35% of the net assets of the scheme directly in real estate (in ready-to-use property that assures rental income and capital appreciation) not stating the maximum investment limit
• Real Estate Investment Trusts (REITs) have been allowed entry into India. REITs cater to the capital requirement of the real estate sector as it enables the company easy access to funds and preferable exit options

[reference: Annual Report 2009, Peninsula Land]

After the super response to Tata Nano, now the Tata group is coming up with Nano homes under the name Shubh Griha, priced between Rs 3.9 lakh and Rs 6.7 lakh.

When and Where? The first township comprising one bedroom-kitchen flats, to be built by Tata Housing Development Company (THDC) will be in the Mumbai suburb Boisar, in Thane district. This housing project is conveniently located within 5 minutes of Boisar railway station and MIDC. Here’s the location map.

This model will be replicated across several metros, tier II and III cities in the country. To learn more, please visit their site: http://www.shubhgriha.com

Various Players in the Low Cost Housing Market: Tata Housing Development Company joins other developers like Puravankara, Omaxe and Housing Development & Infrastructure Ltd (HDIL) that have moved to the affordable housing segment, because that still represents a big market with unmet need. India faces a shortage of 24.7 million dwelling units, with three-fourths of this deficit being in the middle and low-income groups.

The Trend is strong: Others entrepreneurs including Mphasis founder Jaithirth Rao, NGO Janaagraha founder Ramesh Ramanathan and Bangalore based CSC Constructions are also said to be interested into entering this segment and are drawing up their housing projects.

Here’s a question from Tushar Roy: If my monthly take home pay is Rs.12,000, then how much Home Loan amount can I get when it will be for 15 years?

Answer: Please use this Home Loan EMI calculator

http://wealth.moneycontrol.com/emi_calculater.php

You should take EMIs on the lower side of your affordable income because if situation turns difficult with job loss or business loss, then you can still manage to clear the EMIs.

So we are seeing many people getting ready to move away from ICICI Home loans and HDFC Home loans to SBI.  Some people have reported that ICICI is charging 11% to 15% even after RBI’s reduction of rates. So in this case, that decision to move to SBI makes good logic, if ICICI or HDFC are not willing to match the 8% interest rate. You should not pay 3-5% more interest than the lowest rate in the market.

Please check with your bank ASAP on what is they best rate they can offer you. Its a good time to negotiate some decrease in interest rate.

Of course, there is some paperwork needed, and you have to check the specific exit terms and conditions of your current Home Loan.Switching a loan from one bank to another bank is subject to approval of the original bank, and not many existing borrowers with private sector banks may be keen to shift. In fact, a customer may have to give 2% of the loan amount as “prepayment charges” which can be a big deterrent for existing home loan borrowers to shift from their bank.

According to Rajiv Sahni, partner at Ernst & Young (real estate practice): “Following RBI’s cut of major rates such as repo, most banks were pressed by the government to pass on benefits to customers. SBI’s recent rate freeze at 8% for new home loan customers is one such example. Other public sector banks are expected to follow suit. While this may see a marginal shift of customers to PSU banks in the immediate future, private banks are likely to follow suit if they see a positive trend in customers’ reaction to such rate cuts.”

Real Estate Developers believe that the current interest rate reduction by SBI (and other PSU banks) will draw attention of all the home loan borrowers in these difficult times. Sunil Bedi of JMD Group fees that this step by SBI is bound to lead people from private banks to shift to PSUs. It will help save around 3-4% of the interest cost, which will be huge.  And R K Mittal of CHD Developers feels that consumers will definitely want to move to PSU banks due to lower interest rates.

*And now, here’s our view*

If you are looking to buy a new home, remember that Real Estate developers are undergoing huge liquidity crunch, and and no price is non-negotiable. If the property price is R50 lakh, ask for Rs 40 lakh. Those real estate developers who are keen to survive this credit crunch period will respond positively to your message, because they will be glad to sell some of their inventory, and reduce their interest burden.

Remember that our Real Estate developers are currently having huge interest burdens, often at rates above 25%. In general, the property prices should correct further downward in the coming 2-3 months.

So now, the floating rate for home loans has come down from 11.25% to 9.75%, which is the same level as in 2006.

Real estate advisers say the maximum benefit from this rate cut will be for those people looking for home loans between Rs 20 to Rs 30 lakh.

For home loans below Rs 20 lakh, the reduction is 50 basis points as the earlier rate was 10.25%.

This home loan rate cut by HDFC comes on the back of two successive 50 basis point cuts in deposit rates in recent weeks.

This development is also likely to help the troubled real estate sector by getting them some much needed liquidity.

If all you want to do is buy an apartment for yourself, its straight forward. But its different if you want to build an apartment complex or township or SEZ (special economic zone) with FDI (foreign direct investment) or ECB (external commercial borrowing).

Please refer this post: RBI Guidelines for FDI and ECB in Indian Real Estate

Investing in real estate in India requires compliance with various laws, some 100 years old and some new. In addition to Central Govt laws, there are state laws governing real estate transactions and investment.

The Central laws governing real estate include:

Indian Transfer of Property Act

The Transfer of Property Act governs the transfer of property by various means. Sales, mortgages (other than by way of deposit of title deeds) and exchanges of immovable property are required to be registered by virtue of the Transfer of Property Act. Therefore, all the above documents must be in writing and registered.

Indian Registration Act, 1908

The purpose of this Act is the conservation of evidence, assurances, title, publication of documents and prevention of fraud. It details the formalities for registering an instrument. Instruments which require mandatory registration include:

• (a) Instruments of gift of immovable property;
• (b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, to or in immovable property;
• (c) non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of instruments in (2) above.
• (d) leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent

Sales, mortgages (other than by way of deposit of title deeds) and exchanges of immovable property are required to be registered by virtue of the Transfer of Property Act. So all the above documents have to be in writing.

Section 17 of the Act provides for optional registration. An unregistered document will not affect the property comprised in it, nor be received as evidence of any transaction affecting such property (except as evidence of a contract in a suit for specific performance or as evidence of part-performance under the Transfer of Property Act or as collateral), unless it has been registered.

Thus the doctrine of part performance dealt with under Section 53 A of the Transfer of Property Act and the provision of Section 49 of the Registration Act (which provide that an unregistered document cannot be admissible as evidence in a court of law except as secondary evidence under the Indian Evidence Act) together protect the buyer in possession of an unregistered sale deed and cannot be dispossessed. The net effect has been that a large number of property transactions have been accomplished without proper registration.

Instruments such as Agreement to Sell, General Power of Attorney and Will have been indiscriminately used to effect change of ownership. Therefore, investors in real estate have to be careful in their due diligence.

Therfore, establishing “Clear Title” on your desired Indian Real Estate is more complex and time-consuming than it is in America or Europe. Please factor this in your due-diligence.

Reference: http://www.madaan.com/realestate.html

Question by Mr. Narendran: We are Bangalore based real estate company and we are inviting foreign individual investors/institutes to invest in our residential projects across India. We are basically a marketing company and we have now stepped into our own property development in India. Can NRI’s invest through ETFs or ADRs? Kindly comment.

Answer: Thanks for asking your question. Please see the following posts for relevant inputs:

RBI Guidelines for FDI and ECB in Indian Real Estate

How can USA residents invest in India Real Estate through ETFs/ADRs?

So, can NRI’s invest through ETFs or ADRs? The simple answer is Yes in most cases. You should double check that your specific “residential projects” don’t have any regulation constraint from either Central Govt (RBI) or State Govt (I believe some state govts have added clauses to Central govt rules). Since you are already operating in India, you would have a good understanding on these aspects.

One more point from our experience is that if you are looking to attract FDI from NRIs for Real Estate Projects in the form of ETFs/ADRs, then you should tie-up with a company that has existing relationships with NRI investors, so that your offering gains more credibility.

You can contact us if you want help in connect with such companies. Feel free to ask any other question.

Thanks,
Shankar on behalf of India-Real-Estate.org

Question by Mr Prasad: Could you be kind enough to tell me if we can bring FDI in debt form in India in real estate sector under current RBI Guidelines under automatic route and if you can suggest few names to whom we can contact for this for detailed procedures and documentation etc?

Answer: I think when you say FDI in debt form, you meant to say: External Commercial Borrowing (ECB), because FDI (foreign direct investment) stands for investments rather than debt.

The finance ministry allowed External Commercial Borrowing (ECB) in Indian real estate projects (in 2005) involving integrated townships of 25 acres or 50,000 square metres of more. However, the RBI’s position has to be checked on a project by project basis. Its not right to give a general answer on this website – so that other readers don’t take wrong conclusions.

As per our understanding, the RBI allows ECB in real estate projects involving integrated townships of 100 acres or more.

As you maybe aware, in real estate projects, significant capital is required upfront for land acquisition, which is classified as working capital. But end-use restrictions like not allowing ECB money to be used for working capital mean that Foreign funds (as debt) can’t be applied everywhere in Indian Real Estate.

RBI guidelines are often related to type and scale of the project. So if you are planning a large infusion of debt capital then please check RBI guidelines at a micro level.  Our team of legal real-estate experts could offer detailed help on specific cases. Feel free to contact us or ask any other questions.