Is it the right time for NRIs to invest in the Indian realty sector?

Indian realty has always proved to be a lucrative investment for NRIs. Is it the right time now for NRIs to invest in the Indian real estate sector? Yes. Political and economic reforms (rupee depreciation, RERA transparency, post-demonetization price corrections) have made Indian real estate increasingly attractive to NRI investors compared to alternative asset classes like equities and fixed deposits.

For NRI investors evaluating real estate against alternative investment instruments, our investment strategy framework provides a comparative analysis of wealth-building potential across asset classes.

NRI investment in Indian real estate has remained consistently strong, with South India (particularly Hyderabad and Bangalore) capturing a disproportionate share due to RERA transparency (Telangana’s Dharani portal), IT employment growth, and pricing efficiency in dollar terms. The rupee’s depreciation against the US dollar further enhances purchasing power for overseas investors.

FEMA rules set by the RBI for NRIs

To attract more foreign investment, the RBI has made simple rules for NRI investment: “An NRI or a person of Indian origin (PIO), as defined in FEMA, can acquire by way of purchase, any immovable property in India other than agricultural land/plantation property/farmhouse. This is under general permission that has been provided by the Government of India. However, no person with the citizenship of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, shall acquire or transfer immovable property in India, other than lease, not exceeding five years, without prior permission of the Reserve Bank. 

Where can NRIs invest?

NRI’s must first decide whether they are buying a property for end-use or simply for investment purposes. 

When buying a property for end-use there are many options in the residential sector. The speculation-led investment activity has reduced significantly and hence the residential market is at a better place.

In most metro cities where sales in residential realty segments have stagnated, prices have not increased. However, while the prices in most metropolitan cities have remained stable for the past few years, Hyderabad real estate sector has seen a steady price appreciation across the city. Hyderabad’s advantages sit within South India’s broader residential investment case, which we explore in our regional investment analysis.

Also, transparency in the market like the implementation of RERA and Benami Bill being passed by the Indian Government is making the real estate landscape of India very lucrative to the NRIs. Developers are offering customised solutions in the residential sector by building smart homes with an international appeal.

If the person is investing to yield a return on investment in the future, commercial property is the best choice. A good commercial property can give an average rental yield of 6-10% against the current residential property rental yield of 1.5-3.5%. Therefore a good capital appreciation and high rental yield have increased NRI demand for office spaces, logistic centres and REITs as well.

Real estate rules for NRIs

Financial transaction rules:

When it comes to property transactions in India, NRIs/ PIO can make payments out of

• Funds remitted to India through normal banking channel.
• Funds held in NRE/ FCNR (B) / NRO account maintained in India.
• No payment can be made either by traveller’s cheque or by foreign currency notes.
• No payment can be made outside India.

Loan eligibility for NRIs:

NRIs/POI are eligible for a home loan just like resident Indians. They can avail a loan for their property purchase up to 80% of the total property value in Indian rupees. The loan can be repaid in the following ways

• By way of inward remittance through normal banking channels.
• By debit to his NRE / FCNR (B) / NRO account.
• Out of rental income from such property.
• By the borrower’s close relatives, as defined in Section 6 of the Companies Act, 1956, through their account in India, by crediting the borrower’s loan account.”

Taxes for NRIs from real estate investment returns:

NRIs can earn returns from investment in real estate in the form of rental income. However, they need to watch out for certain rules when buying, selling or renting out a property.

While buying the property, NRIs need to deduct TDS at the rate of 1% of the property value, if the property’s value is above ₹50 lakh.

When an NRI sells property in India, the buyer deducts TDS before payment. As of 2024-2026, TDS rates are: 12.5% (plus applicable surcharge and cess) for long-term capital gains (property held over 24 months), or per applicable income tax slab rates for short-term gains (property held under 24 months).

The NRI seller can transfer proceeds outside India or to NRE accounts after paying due taxes. Budget 2026 simplified the process by allowing buyers to deposit TDS using PAN-based challans without requiring a separate TAN, effective October 2026.

In the case of rental income, NRIs are taxed at the same rates as resident Indians, with the highest marginal rate at 30% plus applicable surcharge based on total income. Tax rates as of 2026; consult a tax advisor for current regulations.

Why Hyderabad for NRI Investment?

While real estate activity has varied across India, Hyderabad has maintained consistent residential demand, supported by Telangana’s RERA transparency (the Dharani portal) and steady IT sector employment growth. Hyderabad has demonstrated resilient residential absorption even during periods of broader market volatility, supported by IT employment catalysts and infrastructure momentum.

Judging by the real estate scenario, it can therefore be considered a wise decision if NRIs invest in the Hyderabad real estate sector. Hyderabad’s residential market continues benefiting from strong IT sector job creation, Metro expansion across growth corridors, and transparent RERA delivery enforcement (factors that sustain NRI investor confidence). Many upcoming locations in the western and eastern corridors of the city will witness steep rises in property prices, thereby further drawing end-user and investor interest, especially NRIs.

For NRI investors seeking RERA-registered projects in Hyderabad’s growth corridors, Honer Signatis (RERA: P02200005923) and Honer Aquantis (RERA: P02400001263) offer transparent delivery timelines and Metro connectivity advantages that align with overseas investor priorities.

It is very important for NRIs to do their due diligence before investing in real estate. Checking the property title and the background of the builder is important before investing in an under-construction property.

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