Many NRIs buy flats in India hoping to combine emotional roots with smart investing. However, the reality often disappoints when factoring in rupee depreciation, poor rental yields, long holding periods, and bureaucratic hassles.
A striking example recently surfaced on Economic Times- an NRI couple bought a Hyderabad apartment in 2010 for Rs 64 lakh, expecting value appreciation and rental income.
Fifteen years later, despite selling it for Rs 90 lakh and earning rent, their net gain in U.S. dollar terms was a mere $8,500 — an annualized return of just 0.5%.
Currency fluctuation eroded most gains. In 2010, Rs 64 lakh equaled $111,000; in 2024, their final returns added up to just $120,000.
Investing in an S&P 500 index fund instead could have earned them over $330,000. Maintenance, delayed possession, tenant issues, and taxes made the ordeal worse.
Many NRIs are now cautioning peers by saying don’t assume Indian property is a golden goose. Poor liquidity, low yields, and unpredictable appreciation mean real estate is no longer the surefire bet it once seemed.
For those living abroad, the stress and effort rarely justify the return. Before buying, consider alternatives with better dollar-adjusted returns. Property might be sentimental—but math tells the real story.
Some NRIs may still choose to buy homes in India to provide comfort and stability for their aging parents or dependent siblings — and that can be a meaningful reason. But beyond that, such purchases often turn into a wasteful use of funds and a poorly thought-out financial strategy.
Even high-end gated communities, once seen as the safer bet, are losing their edge. With too many such developments saturating the market, long-term value gets diluted.
While prices might climb in rupee terms, converting those gains into a stronger dollar over time negates most of the upside.
