Investing in commercial property in India can be a highly lucrative opportunity, especially for Non-Resident Indians (NRIs) looking to diversify their portfolio or build a steady rental income. However, the Indian real estate landscape is evolving rapidly and comes with its own set of rules, regulations, and risks. Before you finalize any deal, here are 7 important things NRIs should consider when buying commercial property in India:
1. Understand RBI Regulations for NRIs
Before investing, NRIs must familiarize themselves with the Reserve Bank of India (RBI) guidelines under the FEMA Act. NRIs are allowed to invest in commercial and residential properties (except agricultural land, plantation property, or farmhouses). The purchase must be funded through NRE/NRO/FCNR accounts, and payments must be made in Indian Rupees.
2. Choose the Right Location for High ROI
The success of any commercial real estate investment depends heavily on location. Cities like Bangalore, Mumbai, Pune, Hyderabad, and NCR offer strong infrastructure, corporate demand, and rental yield. Look for locations with excellent connectivity, growing business hubs, and high foot traffic if you plan to lease out the space.
3. Do Thorough Legal Due Diligence
Always verify the title of the property, land use classification, approvals from local authorities, occupancy certificates, and building permits. NRIs should consider hiring a real estate lawyer in India to ensure all paperwork is legitimate and clear of disputes or encumbrances.
4. Check for RERA Registration
All commercial projects must be registered under the Real Estate Regulatory Authority (RERA). RERA ensures transparency and protects buyers from delays or fraud. NRIs must avoid unregistered projects and verify RERA details on the state’s RERA website.
5. Tax Implications and Repatriation Rules
Understand the tax liabilities such as TDS, capital gains tax, and rental income tax in India. Also, know the repatriation rules if you intend to send the money back abroad. NRIs can repatriate the proceeds of up to two properties using NRE accounts, provided taxes are cleared.
6. Assess Rental Potential and Lease Terms
If your goal is rental income, assess the leasing potential, expected monthly rental yield, occupancy trends, and tenant profile. Commercial properties like office spaces, retail shops, and warehouses offer higher returns compared to residential real estate.
7. Work with Reputed Developers and Brokers
NRIs should only deal with trusted real estate developers and licensed brokers to avoid fraud. Choose builders with a good track record of delivery, quality, and transparency. Many reputed firms also offer NRI support services for property management.
Final Thoughts
Buying commercial property in India as an NRI can be a rewarding long-term investment if done right. With growing urbanization and business expansion, commercial real estate offers strong capital appreciation and rental income. However, thorough research, legal compliance, and professional guidance are essential to protect your investment.
Whether you’re planning to invest in a retail space, office unit, or co-working property, keeping these 7 points in mind will help you make an informed decision and maximize returns.