Why NRIs are Investing in Indian Real Estate in 2026

Indian real estate has always held emotional and financial appeal for Non-Resident Indians (NRIs). But in the recent years, that interest has accelerated, and it's not just nostalgia at play. With a blend of economic strength, regulatory clarity, and favourable returns, India's property market is ticking all the right boxes.

This blog unpacks the rising interest of NRIs in Indian real estate, offering insights on what's driving it, how to invest, and what to expect.

What's Fuelling the NRI Interest in Indian Real Estate?

A Stable Economy with Real Growth Potential

India's GDP continues to rise steadily, backed by a young workforce, tech innovation, and a resilient consumer base. As the economy expands, so does the demand for residential and commercial spaces, offering NRIs solid prospects for long-term capital appreciation.

Strong Currency Advantage

Favourable exchange rates, especially against the rupee, make investing in Indian real estate far more cost-effective for NRIs. What might be a modest budget in USD or AED can unlock premium property options in India.

Reforms that Inspire Trust

Government initiatives like RERA (Real Estate Regulatory Authority), GST reforms, and digital land record systems have injected transparency and accountability into the sector. NRIs, who once hesitated due to opaque dealings, now see a well-regulated market.

Diversifying Global Portfolios

Global Investor, including NRIs, are increasingly looking to de-risk their wealth across asset classes and geographies, Indian real estate, with its mix of affordability, potential, and emotion offers a compelling diversification play.

Evolving Infrastructure and Urban Growth

Smart cities, metro lines, expressways, and IT corridors are not just improving liveability, they're driving property demand in new micro-markets. NRIs are eyeing both established metros and fast-developing Tier-2 cities for better entry points and high returns.

Real Rental Potential

Rental yields in India can go as high as 5-6% in cities like Hyderabad, Pune, and Bangalore. Add to that the rise of managed rental platforms and co-living spaces, and property ownership no longer means physical involvement.

Lifestyle Upgrades at a Lower Cost

Premium apartments, gated communities, and integrated townships in India now rival international standards at a fraction of the global price. NRIs find this especially appealing for holiday homes, retirement planning, or second homes.

Sentimental and Strategic Buying

Beyond the ROI, NRIs often invest in Indian Real Estate to stay connected to their roots, support family back home, or plan their eventual return. It's not just strategy, it's sentiment too.

How NRIs Can Legally Invest in Indian Property

Under the Foreign Exchange Management Act (FEMA), NRIs can invest in residential and commercial properties without prior approval. However, they cannot purchase agricultural land, farmhouses, or plantation land.

Key FEMA Guidelines:

• Payments must be made through Indian banking channels using NRE/NRO/FCNR accounts.
• Funds from abroad must be routed through normal banking channels.
• Repatriation of sale proceeds is allowed, but within prescribed limits.

Types of Properties NRIs Can Invest In

• Apartments and Villas: For rental income or personal use
• Commercial Spaces: Offices and retail for higher ROI
• Plots and Land (non-agricultural): For long-term capital gain
• Luxury Properties: For prestige and high-net-worth investment

Financing and Taxation

Home Loans:

NRIs can avail of home loans from Indian banks. The repayment must be made via inward remittances or from NRO/NRE accounts.

Tax Rules:

• NRIs are liable for TDS at 20% on property sales.
• Property income is taxed as per Indian slabs but can be offset via DTAA (Double Tax Avoidance Agreement).
• Capital gains tax is applicable on sale, but reinvestment under sections like 54 and 54EC offers exemptions.

How to Buy Property in India: A Step-by-Step Snapshot

1. Shortlist the city and project
2. Verify builder credentials and RERA number.
3. Open an NRE/NRO account in India.
4. Appoint a legal advisor for due diligence.
5. Sign sale agreement and pay booking amount
6. Secure a home loan if needed
7. Register the property and pay stamp duty
8. Set up utility connections and possession documents

Tip: Consider a Power of Attorney (PoA) if you're unable to be present in India.

Where are NRIs Buying in 2025?

Top Cities:

• Hyderabad – High rental yields, IT-driven growth
• Pune – Educational hub, affordable luxury
• Bangalore – Consistent job market and appreciation
• Gurgaon – Corporate presence, smart infrastructure
• Mumbai MMR – Established market with steady returns
• Chennai – Stable demand, especially in NRIs from the Middle East

Emerging Tier-2 Cities:

• Indore – High liveability, IT growth
• Nagpur – Industrial corridors and SEZ
• Lucknow – Civic upgrades, affordable housing
• Coimbatore – NRI-friendly with rising luxury market

Key risks to be aware of:

• Delayed Possession: Always choose RERA-registered projects.
• Legal Title Issues: Get title checks and encumbrance certificates.
• Currency Risk: Fluctuations may impact real returns.
• Repatriation Limits: Know the RBI norms in advance.

Government Support for NRI Investors

• Reduced compliance with digitized documentation
• RERA ensuring builder accountability
• Eased repatriation policies via FEMA
• Banking support for international remittances