For foreign investors, the appeal of India’s rapidly developing cities and expanding infrastructure is clear. However, many face challenges related to stringent regulations and approval processes, particularly under the FEMA and RBI guidelines.

Nonetheless, India's real estate market has become increasingly attractive to foreign investors, with significant growth in institutional investments. In 2024, foreign institutional investors contributed 63% of the total USD 8.87 billion invested in Indian real estate, highlighting the growing appeal of the market.

While Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) can invest more freely, foreign nationals face stricter conditions, including prohibitions on agricultural land and additional requirements for property types.

This blog provides a comprehensive guide to help foreign nationals understand the eligibility criteria, legal framework, and key considerations when investing in Indian real estate. 

Key Takeaways

• Eligibility: NRIs and OCIs can buy residential/commercial property, but foreign nationals need to be residents for 182 days in the previous year. Agricultural land is restricted.

• Legal Framework: Foreign nationals must follow FEMA regulations and obtain RBI approval for agricultural land. RERA ensures property transparency.

• Property Types: Foreigners can invest in residential and commercial properties, but not agricultural land or farmhouses.

• Documentation: Required documents include passport, visa, PAN card, and payments must be made via NRE, NRO, or FCNR accounts in Indian Rupees.

• Financing: Foreign nationals cannot access home loans unless NRI/OCI. Alternative financing includes international loans or partnerships.

Eligibility Requirements for Foreign Property Buyers

Purchasing property in India is straightforward for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs), but foreign nationals face several restrictions. Understanding who is eligible and the necessary steps is crucial before venturing into the Indian real estate market.

For NRIs and OCIs:

• Property Types: Can buy residential and commercial properties.

• Funding: Transactions must be carried out via NRE, NRO, or FCNR accounts in Indian Rupees.

For Foreign Nationals:

• General Restrictions: Cannot buy property unless residing in India for more than 182 days in the previous financial year.

• Special Permissions: Agricultural land, plantations, and farmhouses are strictly off-limits. Foreign nationals can acquire these only through inheritance or as a gift, with additional permissions required.

• Country-Specific Restrictions: Citizens from countries like Pakistan, Bangladesh, and China face extra hurdles and may need RBI permission to purchase property.

Also Read: Understanding TDS in Property Purchase and Sale in Real Estate

Legal Framework for Foreign Property Acquisition

Under the Foreign Exchange Management Act (FEMA), foreign nationals of non-Indian origin are generally prohibited from purchasing agricultural land, plantation properties, or farmhouses in India.

This restriction is enforced through the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, and is overseen by the Reserve Bank of India (RBI).

Key Legal Considerations

• FEMA’s Role: Primarily governs foreign property transactions, ensuring the legality of funds and properties involved.

• State-Specific Restrictions: Certain states, such as Himachal Pradesh and Uttar Pradesh, impose additional restrictions on land purchases.

• Agricultural Land: Requires explicit RBI approval, regardless of the buyer’s residency status.

Real-World Example

A notable case involved a U.S. citizen and Overseas Citizen of India (OCI) cardholder who purchased agricultural land in Tamil Nadu without obtaining prior RBI approval. 

The RBI imposed a penalty calculated as a percentage of the transaction value, and the Delhi High Court upheld this penalty, emphasising the importance of adhering to FEMA regulations.

Implications for Foreign Nationals

Foreign nationals interested in acquiring agricultural land in India must obtain explicit permission from the RBI. Without such approval, any transaction may be deemed illegal, leading to potential penalties, including fines up to three times the amount involved and possible confiscation of the property.

For foreign investors looking to understand India’s property regulations, BCD India offers expert advisory services. Our team provides clear, practical insights into real estate investments, ensuring compliance with legal requirements and long-term growth potential. 

Now that you understand the legalities, let’s explore the types of properties foreign nationals can invest in and the restrictions that may apply.

Property Types Available for Foreign Investment

India's real estate sector offers a range of investment opportunities for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs). However, foreign nationals of non-Indian origin face stricter regulations when it comes to property purchases.

1. Available for NRIs/OCIs

NRIs and OCIs have greater flexibility in purchasing property in India, but there are specific property types they can invest in:

• Residential Properties: NRIs and OCIs can purchase residential properties, including apartments, independent houses, and villas, either for personal use or as investment assets.

• Commercial Properties: Investment in commercial real estate, such as office spaces, retail outlets, and industrial units, is permitted for NRIs and OCIs.

2. Restrictions

Foreign nationals and NRIs/OCIs face restrictions on certain types of property, particularly agricultural land:

• Agricultural Land: NRIs and OCIs are prohibited from purchasing agricultural land, plantation properties, or farmhouses in India. This restriction is enforced under the FEMA and RBI regulations. Any acquisition of such properties requires explicit permission from the RBI, which is rarely granted.

• Foreign Nationals of Non-Indian Origin: Foreign nationals residing outside India cannot purchase immovable property in India. However, they may lease property for residential purposes, provided the lease period does not exceed five years.

3. Inheritance and Gifts

NRIs and OCIs can inherit or receive property as a gift, but there are limitations on agricultural land:

• Inheritance: NRIs and OCIs can inherit agricultural land, plantation properties, or farmhouses from a person who was a resident of India. However, they cannot acquire such properties through purchase.

• Gifts: Agricultural land can be gifted to NRIs or OCIs only by a person who is an Indian citizen and a resident of India. Gifts from other NRIs or OCIs are not permitted.

4. Foreign Corporates

Foreign companies operating in India have a specific scope of property acquisition:

• Business-Related Purchases: Foreign companies are allowed to acquire property for business purposes, such as establishing offices or manufacturing units. These transactions are subject to FEMA and RBI regulations and must align with business needs.

5. State-Specific Regulations

Certain states in India impose additional rules or relaxations related to property acquisition:

• Maharashtra: The Maharashtra Prevention of Fragmentation and Consolidation of Holdings Act, 1947, was amended to lift restrictions on the division of non-agricultural land in urban and regional plan areas, facilitating the regularisation of fragmented land transactions for urban development.

Also Read: Top Tips for Finding Off-Market Commercial Real Estate Deals

Essential Documentation and Financial Guidelines

For foreigners looking to purchase property in India, specific documentation and financial processes must be followed to ensure compliance with Indian laws.

Documents Required for Foreign Investors

• Passport: Mandatory for identification.

• Visa: Required to confirm the duration of stay in India.

• PAN Card: Essential for tax-related purposes.

• Power of Attorney (PoA): If the buyer cannot be present physically, a PoA is needed, validated by an Indian consulate.

Financial Guidelines

• NRE/NRO Accounts: All payments must be routed through these accounts.

• Transaction Currency: All property transactions must be conducted in Indian Rupees. Foreign currency is not permissible.

• Legal Verification: Property documents (title deeds, sale agreements) must be verified by a qualified legal advisor to avoid future disputes.

Securing financing can be a challenge for foreign nationals, but there are options available. Let’s break down the key financing avenues.

Financing Options for Foreign Buyers

While NRIs and OCIs have specific financing options, foreign nationals face challenges when applying for home loans in India.

1. Loan Availability for NRIs and OCIs

• Loan-to-Value (LTV): Up to 75%-90% of the property’s value can be covered by a home loan.

• Eligibility: Applicants must provide documents such as employment proof, bank statements, and overseas address proof.

• Interest Rates: Starting from 7-8% per annum for salaried NRIs 

2. Challenges for Foreign Nationals

• Foreign nationals are usually ineligible for Indian home loans unless they hold NRI or OCI status. They will need to explore other financing options, such as international loans or partnerships.

Pro Tip: If you're a foreign national, consider structuring your investment through an NRI or OCI family member to benefit from loan facilities.

Now that you know the basics, let’s explore some strategies that will help you maximise returns in India’s real estate market.

Key Strategies for Foreign Nationals Investing in Indian Real Estate

Investing in Indian real estate offers foreign nationals opportunities for capital appreciation, rental income, and portfolio diversification. However, to understand the complexities of the market effectively, it's essential to adopt informed and strategic approaches. 

Below are research-backed strategies tailored for foreign investors:

1. Use Currency Depreciation for Cost Advantage

The depreciation of the Indian Rupee (INR) against major currencies like the US Dollar, Euro, and British Pound enhances the purchasing power of foreign investors. 

For instance, a 10% depreciation in the INR can result in a 10% cost advantage for investors earning in USD, GBP, or EUR. 

This trend allows investors to acquire properties at more favourable rates, potentially leading to significant capital appreciation over time.

​​2. Diversify Investment Portfolio with Commercial Real Estate

Commercial real estate (CRE) in India has become increasingly attractive to foreign investors. A survey by SBNRI indicates that 52% of NRIs are investing in CRE for high returns and portfolio diversification. The sector's growth is driven by factors such as:

• Institutional Investments: In 2025, institutional investment in India's office real estate sector surged by 27% year-on-year, reflecting renewed investor confidence.

• Regulatory Enhancements: The introduction of the Real Estate (Regulation and Development) Act (RERA) and the Goods and Services Tax (GST) has improved transparency and reduced fraud, making CRE a viable option for foreign investors.

3. Invest in Tier-2 Cities for High Returns

Emerging tier-2 cities like Vellore, Trichy, and Coimbatore offer promising investment opportunities due to:

• Economic Growth: Vellore's real estate market has experienced an annual growth rate of 8-10% from 2020 to 2025, driven by infrastructure development and institutional growth.

• Urbanisation Trends: Trichy's property market surged by 50% in 2025, driven by heightened interest from NRIs and urban buyers, thanks to new infrastructure developments and industrial investments.

4. Utilise Real Estate Investment Trusts (REITs) for Passive Investment

REITs offer a platform for foreign investors to participate in the Indian real estate market without direct property ownership. 

The Securities and Exchange Board of India (SEBI) has proposed expanding the scope of strategic investors in REITs to include a broader range of institutional investors, aiming to boost capital inflows into the real estate sector. 

This move enhances the attractiveness of REITs for foreign nationals seeking passive investment avenues.

5. Implement the BRRRR Strategy for Portfolio Expansion

The BRRRR method—Buy, Rehab, Rent, Refinance, Repeat—is a strategy that allows investors to build a portfolio of rental properties by recycling initial capital through refinancing. 

For foreign nationals, this approach can be effective in India's growing real estate market, provided they:

• Conduct Thorough Due Diligence: Ensure properties have clear titles and are in areas with strong rental demand.

• Understand Local Regulations: Familiarise themselves with state-specific laws and the Real Estate (Regulation and Development) Act (RERA) to ensure compliance.

Also Read: Stamp Duty on Gift Deed: Rates, Tax, and Regulations in India

How to Invest in the Indian Property Market as a Foreigner

Investing in Indian real estate as a foreigner requires understanding the regulatory landscape, legal requirements, and strategic market choices. Here’s a step-by-step guide to make the process smooth and secure:

1. Choose the Right Property: Identify your investment goals and decide between residential, commercial, or industrial property.

2. Legal and Financial Checks

• Title Deed: Confirm clear ownership with no liabilities.

• RERA Registration: Ensure under-construction properties are RERA-approved.

• Land Use: Verify zoning compliance for intended use.

• Payments: Transactions must be through NRE, NRO, or FCNR accounts.

3. Execute the Sale Deed and Register: Sign and register the Sale Deed at the local Sub-Registrar’s Office. Pay stamp duty and submit the necessary documents.

4. Property Handover: Use a Power of Attorney (PoA) for handover if you are overseas. Ensure that documents such as the possession certificate and No Dues Certificate are transferred.

Finally, it’s important to understand the tax implications and repatriation rules when it comes to foreign investments in Indian real estate.

Tax Considerations and Repatriation Rules

Foreign investors need to understand the tax implications and rules for repatriating funds after selling property in India. Here’s a summary of what to expect:

Capital Gains Tax:

• Short-Term Capital Gains (STCG): Taxed at 30% for properties held for less than two years.

• Long-Term Capital Gains (LTCG): Taxed at 20% with indexation benefits for properties held for more than two years.

Repatriation Rules:

• NRIs can repatriate sale proceeds from up to two residential properties per year, provided the funds were originally transferred from an NRE/FCNR account.

• The maximum remittance allowed is USD 1 million per financial year.

Conclusion

India’s real estate market offers significant opportunities for foreign investors, from residential and commercial properties to emerging markets in tier-2 cities and REITs. 

As the real estate market in India continues to expand, staying updated and adapting to changes is essential. With the proper knowledge and strategies, foreign investors can tap into the immense potential of India’s thriving property market.

Want more insights on India’s property market trends, homebuying strategies, and investment opportunities? Subscribe to Ashwinder R. Singh’s newsletter for weekly tips, real estate intelligence, and expert perspectives. Stay informed and make confident decisions in Indian real estate!

As Vice Chairman & CEO of BCD Group, Ashwinder brings a wealth of experience and a forward-thinking approach to discussions about the Indian real estate market. 

FAQs

Q: Can a foreign national buy multiple properties in India?

A: Yes, foreign nationals can buy multiple properties in India, but each transaction must comply with FEMA and RBI regulations. They must ensure the properties are not agricultural land, plantations, or farmhouses, which are restricted for foreign ownership.

Q: Are there any restrictions on foreign ownership in specific property sectors like hospitality or retail?

A: Foreign nationals can invest in the hospitality and retail sectors, but the regulations can be complex. For retail investments, the Foreign Direct Investment (FDI) policy applies, and foreign nationals must follow the sector-specific FDI guidelines and regulatory approvals.

Q: How does the Foreign Exchange Management Act (FEMA) impact foreign property investments?

A: FEMA regulates foreign investments in Indian real estate, ensuring that the source of funds is legally compliant. It restricts foreign nationals from purchasing agricultural land and requires RBI approval for certain property types, ensuring transparency and protecting Indian interests.

Q: Can foreign nationals invest in Indian property through a joint venture with an Indian partner?

A: Yes, foreign nationals can partner with an Indian entity in a joint venture to invest in Indian real estate. The investment structure must comply with FEMA regulations and foreign investment policies, and profits must be repatriated according to RBI guidelines.

Q: Do foreign nationals need to pay higher stamp duty or taxes on property purchases in India?

A: Foreign nationals are subject to the same stamp duty and taxes as Indian residents, although the rates may vary depending on the state and property type. However, they may face additional compliance requirements, such as tax clearance and remittance restrictions, when repatriating funds.