Many non-resident Indians (NRIs) invest heavily in Indian real estate, however experts have flagged that these properties may not give the financial returns or security buyers expect. Non-resident Indians (NRIs) who have concentrated their wealth in Indian real estate are facing increasing challenges, with experts cautioning that such investments may not deliver the financial returns or security many expect. The trend of investing in homes or land back in India has long been popular among NRIs, often motivated by plans to return, family expectations, or the perception of property as a safe, tangible asset. However, market observers note that these holdings frequently underperform as an investment.In a column for ET, Uma Shashikant, chairperson of the Centre for Investment Education and Learning, highlighted the risks of investing in property in India.
Older flats can become outdated
Housing in India has changed fast. Older properties risk becoming outdated, as housing standards in India have evolved rapidly in recent decades. Flats purchased even five to ten years ago may lack modern amenities, efficient layouts, or the design features that newer developments offer, reducing their attractiveness to potential buyers or renters. “The houses bought for occupation after serveral years run the risk of obsolescence. Many of them admitted they were unhappy with the flats they had purchased just a few years ago. Hence, that 1,500 sq ft flat in a crowded complex could run the risk of becoming unattractive over the years,” she wrote.
Family gifts can limit control
Family-related purchases can further complicate the picture. Many NRIs buy property to provide better living conditions for parents or relatives, often leaving the asset in the family member’s name. While such purchases may carry sentimental value, they rarely generate income for the buyer and can limit legal control over the asset. “It turns out to be an investment that yields no rent or return, but further commitments for upgradation and possible loss of ownership of the asset,” she added.
Currency risks reduce value
Currency depreciation compounds the problem. Investments funded in foreign currency lose value over time as the rupee weakens, reducing the international purchasing power of these properties. “These investments are made mostly due to pressure from families and parents to invest in property back home as a safety net or hook for possible return.” With children growing up abroad, and NRIs increasingly unlikely to return, many find themselves holding large, illiquid assets that no longer serve their intended purpose.
Managing property from abroad is tough
NRIs often avoid property management services due to cost. But leaving flats empty or relying on distant oversight can lead to expensive repairs, tenant issues, and legal hassles. Experts say that NRIs should consider buying property where they live. Local real estate is easier to manage, less affected by currency swings, and can provide rental income or inheritance benefits.She added, that by purchasing property where they live they “will benefit from laws and processes that they understand; proximity and better level of control; ease of sale without the fear of black money; availability to children as a bequest; and no loss from currency depreciation.”
