23/06/2025
In 2010, an NRI couple decided to capitalize on Hyderabadโs burgeoning real-estate market by purchasing a three-bedroom apartment in Nanakramguda for โน64 lakh. At that time, the suburb was being hailed as the next major growth corridor, and the expectation was two-fold: steady capital appreciation and a healthy rental yield to supplement their overseas income.
๐ ๐๐จ๐ง๐ ๐๐๐ข๐ญ ๐๐จ๐ซ ๐๐จ๐ฌ๐ฌ๐๐ฌ๐ฌ๐ข๐จ๐ง
Over the next nine years, the couple honored their payment schedule to the builder and invested an additional โน5 lakh in woodwork, painting and minor repairs. Yet, when possession finally arrived in 2019โalmost a decade laterโthe delay had already eroded much of the original timing advantage that had fueled their decision.
๐๐๐ง๐ญ๐๐ฅ ๐๐ง๐๐จ๐ฆ๐ ๐ฏ๐ฌ. ๐๐๐๐ฅ ๐๐จ๐ฌ๐ญ๐ฌ
Between 2019 and 2024, the flat generated roughly โน12 lakh in gross rent. After accounting for maintenance, property taxes and tax on rental income, their net cash flow stood at approximately โน7.2 lakh. Viewed in isolation, this seems like a respectable supplement to a foreign salaryโbut it fails to account for hidden costs:
- ๐๐ซ๐จ๐ฉ๐๐ซ๐ญ๐ฒ ๐๐๐ง๐๐ ๐๐ฆ๐๐ง๐ญ: Coordinating repairs and tenant turnover from overseas often incurs higher professional fees.
- ๐๐๐๐๐ง๐๐ฒ ๐๐ข๐ฌ๐ค: Even in a hot market, finding reliable tenants can take weeks or months.
- ๐๐๐ ๐ฎ๐ฅ๐๐ญ๐จ๐ซ๐ฒ ๐๐ฎ๐ซ๐๐ฅ๐๐ฌ: NRIs face additional compliance requirements under FEMA and Income-tax Act provisions, which translate to legal and accounting expenses.
๐๐๐ฅ๐ ๐๐ง๐ ๐ญ๐ก๐ ๐๐๐๐๐ฉ๐ญ๐ข๐ฏ๐ โ๐๐๐ข๐งโ
In 2024, the couple sold the apartment for โน90 lakh. After paying a 2% brokerage and long-term capital gains tax, they walked away with close to โน84.9 lakh. On paper, the transaction yielded a combined โน28.9 lakh (sale proceeds plus net rent)โa 45% return over 15 years, or roughly 2.5% per annum in INR terms.
๐๐ก๐ ๐๐ฎ๐ซ๐ซ๐๐ง๐๐ฒ ๐
๐๐๐ญ๐จ๐ซ: ๐๐ก๐๐ซ๐ ๐ญ๐ก๐ ๐๐๐๐ฅ ๐๐๐ฌ๐ฌ๐จ๐ง ๐๐ข๐๐ฌ
For NRIs, however, domestic currency returns can be misleading. In 2010, โน64 lakh converted to about $111,740 USD (โน45/USD). By 2024, with the rupee trading around โน85/USD, their total rupee proceeds of โน93.7 lakh (sale plus rent) equated to just $100,000 USD. In dollar terms, their profit was a scant $8,500 over 15 yearsโan annualized return of roughly 0.5%.
Contrast that with a hypothetical investment in a U.S. equity index:
๐. ๐&๐ ๐๐๐ ๐๐ซ๐จ๐ฐ๐ญ๐ก: A lump-sum of $111,740 in June 2010 would have grown to over $330,000 by mid-2024, even after standard reinvestment of dividends.
๐. ๐๐ฉ๐ฉ๐จ๐ซ๐ญ๐ฎ๐ง๐ข๐ญ๐ฒ ๐๐จ๐ฌ๐ญ: The couple effectively missed out on upward of $220,000โor about โน1.8 croreโby choosing bricks and mortar over a globally diversified equity portfolio.
Deeper Takeaways for the NRI Investor
๐. ๐๐ฎ๐ซ๐ซ๐๐ง๐๐ฒ ๐๐ข๐ฌ๐ค ๐๐ฌ ๐๐๐๐ฅ: Even if an asset outperforms locally, depreciation can nullify gains in your reference currency.
Time Horizon Matters: Real-estate projects often suffer delays; the longer the gestation, the higher the embedded risk.
Total Cost of Ownership: Maintenance, taxes, brokerages and compliance fees can shave off 30โ40% of your gross returns.
๐. ๐๐ข๐ฏ๐๐ซ๐ฌ๐ข๐๐ข๐๐๐ญ๐ข๐จ๐ง ๐๐๐ฒ๐ฌ ๐๐๐: Geographic and asset-class diversification can mitigate local market and currency fluctuations.
By scrutinizing both rupee- and dollar-based returns, we see that headline gains in one currency can mask stagnationโor even lossโin another. As someone who advises NRIs on building and preserving wealth, this case underscores the importance of adopting a holistic view: always model your investments in the currency in which your liabilities and lifestyle are denominated.
