Mumbai, India’s Sky-High Metropolis

November 6, 2013 No Comments

Mumbai SkylineMumbai is the capital of a rapidly changing nation. The growth of India’s economy is reflected in Mumbai’s changing skyline and the aspirations of a growing number of newly-wealth Indians, and Mumbai has grown to become one of the world’s top ten cities in terms of financial flow. It’s also the centre of India’s financial, cultural and intellectual life and the home of numerous financial institutions. India’s government recognises this, and Mumbai has been the focus of extensive infrastructure investment including the resurfacing of Mumbai’s roads and the construction of a new Metro system.

Land is in high demand, so premium property in Mumbai typically means a condominium, with the bulk of new building efforts focussed on multi-use and residential towers. These properties are among the most expensive in the developing world, beating out Shanghai, Beijing, Bangkok and New Delhi.

Many of these apartments are seeing appreciation, with prices across Mumbai rising from 2008 to 2013 by an average of 66%. However, some areas have seen falls of 30% in price as newer suburban developments block premium South Mumbai apartments’ desirable – and saleable – views. Gains are though to be driven by a shortage of clear land and the onus on companies to provide assured returns for investors who bought in at the planning stage, coupled with rising borrowing costs. It’s quite common in the Mumbai premium market to enter an agreement with a developer before construction begins.

Buying property in Mumbai can be lucrative, but it can also be problematic. The 1973 Foreign Exchange Regulations Act stipulates that property can be bough free and clear only by Indians, including non-resident expatriates, and foreign-born individuals who can prove direct Indian descent. For other foreign nationals, eligibility is determined by residency. The annual residency requirement is 183 days, while tourist visas expire after 180 days, so it’s typically necessary to renew tourist visas by re-entry to establish residency.

Additionally, under India law, only one property you own will be regarded as used for residence. Any other property you own will be deemed to be given for rent – even if it is untenanted – and will fall liable for income tax on the ‘deemed rent,’ which is figured out by valuation terms in the Income Tax Act. Foreign nationals can take out home loans on Indian properties, and these loans can be repaid by post-dated cheque or by remittance from an Indian or non-Indian bank account.

A final consideration is the use of an Indian with power of attorney to act on your behalf; some developers will require this to expedite a deal which will otherwise require the mailing of documents to the principal’s home country. Using someone with power of attorney can also save you money and time if you’re buying a property that’s already constructed. It’s a wise idea to give a specific individual power of attorney for specific elements of a deal only.

Written by of Ltd.

Image courtesy of Ciddy Hat

Tags: , , Global Property Data, International Property

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