23/06/2025
In 2010, an NRI couple decided to capitalize on Hyderabad’s burgeoning real-estate market by purchasing a three-bedroom apartment in Nanakramguda for ₹64 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.
𝐀 𝐋𝐨𝐧𝐠 𝐖𝐚𝐢𝐭 𝐟𝐨𝐫 𝐏𝐨𝐬𝐬𝐞𝐬𝐬𝐢𝐨𝐧
Over the next nine years, the couple honored their payment schedule to the builder and invested an additional ₹5 lakh in woodwork, painting and minor repairs. Yet, when possession finally arrived in 2019—almost a decade later—the delay had already eroded much of the original timing advantage that had fueled their decision.
𝐑𝐞𝐧𝐭𝐚𝐥 𝐈𝐧𝐜𝐨𝐦𝐞 𝐯𝐬. 𝐑𝐞𝐚𝐥 𝐂𝐨𝐬𝐭𝐬
Between 2019 and 2024, the flat generated roughly ₹12 lakh in gross rent. After accounting for maintenance, property taxes and tax on rental income, their net cash flow stood at approximately ₹7.2 lakh. Viewed in isolation, this seems like a respectable supplement to a foreign salary—but it fails to account for hidden costs:
- 𝐏𝐫𝐨𝐩𝐞𝐫𝐭𝐲 𝐌𝐚𝐧𝐚𝐠𝐞𝐦𝐞𝐧𝐭: Coordinating repairs and tenant turnover from overseas often incurs higher professional fees.
- 𝐕𝐚𝐜𝐚𝐧𝐜𝐲 𝐑𝐢𝐬𝐤: Even in a hot market, finding reliable tenants can take weeks or months.
- 𝐑𝐞𝐠𝐮𝐥𝐚𝐭𝐨𝐫𝐲 𝐇𝐮𝐫𝐝𝐥𝐞𝐬: NRIs face additional compliance requirements under FEMA and Income-tax Act provisions, which translate to legal and accounting expenses.
𝐒𝐚𝐥𝐞 𝐚𝐧𝐝 𝐭𝐡𝐞 𝐃𝐞𝐜𝐞𝐩𝐭𝐢𝐯𝐞 “𝐆𝐚𝐢𝐧”
In 2024, the couple sold the apartment for ₹90 lakh. After paying a 2% brokerage and long-term capital gains tax, they walked away with close to ₹84.9 lakh. On paper, the transaction yielded a combined ₹28.9 lakh (sale proceeds plus net rent)—a 45% return over 15 years, or roughly 2.5% per annum in INR terms.
𝐓𝐡𝐞 𝐂𝐮𝐫𝐫𝐞𝐧𝐜𝐲 𝐅𝐚𝐜𝐭𝐨𝐫: 𝐖𝐡𝐞𝐫𝐞 𝐭𝐡𝐞 𝐑𝐞𝐚𝐥 𝐋𝐞𝐬𝐬𝐨𝐧 𝐋𝐢𝐞𝐬
For NRIs, however, domestic currency returns can be misleading. In 2010, ₹64 lakh converted to about $111,740 USD (₹45/USD). By 2024, with the rupee trading around ₹85/USD, their total rupee proceeds of ₹93.7 lakh (sale plus rent) equated to just $100,000 USD. In dollar terms, their profit was a scant $8,500 over 15 years—an annualized return of roughly 0.5%.
Contrast that with a hypothetical investment in a U.S. equity index:
𝟏. 𝐒&𝐏 𝟓𝟎𝟎 𝐆𝐫𝐨𝐰𝐭𝐡: 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.
𝟐. 𝐎𝐩𝐩𝐨𝐫𝐭𝐮𝐧𝐢𝐭𝐲 𝐂𝐨𝐬𝐭: The couple effectively missed out on upward of $220,000—or about ₹1.8 crore—by choosing bricks and mortar over a globally diversified equity portfolio.
Deeper Takeaways for the NRI Investor
𝟑. 𝐂𝐮𝐫𝐫𝐞𝐧𝐜𝐲 𝐑𝐢𝐬𝐤 𝐈𝐬 𝐑𝐞𝐚𝐥: 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 30–40% of your gross returns.
𝟒. 𝐃𝐢𝐯𝐞𝐫𝐬𝐢𝐟𝐢𝐜𝐚𝐭𝐢𝐨𝐧 𝐏𝐚𝐲𝐬 𝐎𝐟𝐟: 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 stagnation—or even loss—in 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.
