Should NRIs put ₹20 crore into luxury real estate? Costs vs rewards explained

By Bricksnwall | 2026-04-22

NRIs who want to buy luxury property back home should think about hidden expenditures that come up again and again, such property taxes and maintenance fees, before making a purchase.

Should Indians who don't live in India own luxury real estate worth more than ₹20 crore? These kinds of investments can provide you big returns, but the actual story is more than just the big gains. Costs that aren't obvious and happen on a regular basis, such hefty maintenance fees, contributions to a sinking fund, property taxes, insurance, and periodic renovations, can have a big effect on net returns, especially in high-end complexes.

For NRIs, a better plan is to invest for the long term, focus on high-quality assets in prime markets, stagger investments instead of putting a lot of money into one at a time, and balance returns by getting both rental income and capital gains. Financial analysts argue that currency cycles can be unstable, but strong real estate fundamentals can help smooth out these changes over time.

Rahul Chaturvedi, an NRI living in London, spent ₹22 crore on a luxurious property in Mumbai. He did this to improve his lifestyle and make a long-term investment. His entire costs, including duties, are almost ₹23.8 crore. Over five years, constant appreciation of about 5% and some rental income helped the overall returns, but maintenance expenditures and changes in the value of the dollar limited gains in dollar terms. Even while the investment may not have done better than a mix of global assets, it did provide value through asset appreciation, portfolio diversification, and personal usefulness. This shows how important both emotion and strategy are in making these kinds of decisions.

Let's see if it makes sense for NRIs to buy expensive real estate in India and what they need to think about.

Tushar Kumar, a lawyer at the Supreme Court of India, states, "An emotional purchase is usually based on prestige-driven factors, prime addresses, architectural indulgence, or family ties, and often comes with low returns and no exit strategy."

On the other hand, a good investment must be able to stand up to objective scrutiny, which includes rental yield, comparable market data, obvious demand drivers, and a clear path to liquidity.

"The main concern is whether the investment rationale is strong enough on its own to stand up to personal use. If the reason is family needs, heritage positioning, or ease of use, it is more correctly called consuming. Madhura Samant, a partner at Elarra Law Offices, states that a financial investment must have a clear return thesis, a set holding time, and a plausible exit strategy.

A number of hidden and recurrent charges that are typically not taken into account when buying something make the erosion of returns even worse.

Stamp duty, registration, brokerage, and other fees add a lot of costs to the beginning of a capital investment. Ongoing costs include upkeep, empty periods, property management (particularly for owners who aren't there), and repairs that need to be done every now and then lower the overall net yield even further.

When you sell, capital gains taxes and illiquidity discounts often lower your realized returns even further. Kumar notes, "It is not uncommon for such assets to need a lot of appreciation just to keep their real value."

When you take into account currency changes and taxes, luxury real estate in India is becoming more competitive with investment opportunities throughout the world. For NRIs, a stronger dollar or dirham against the rupee means they can buy more. In areas like Mumbai, Delhi-NCR, and Bengaluru, where entry costs are lower and appreciation potential is higher, total returns are better.

Even if there are levies like stamp duty and capital gains, many established global markets have smaller yields and less room for growth. Pratyush Pandey, founder of AARE Consulting, a real estate consulting firm, says, "Indian luxury housing is still an attractive asset class for NRIs looking to build wealth and diversify their portfolios over the medium to long term."

Comprehending currency risks

In this case, currency risk is the most important thing. If an NRI puts money into a property that is worth a dollar but is denominated in rupees, they are effectively taking an unhedged long position on the Indian currency.

Kumar states, "Historical trends show that the rupee has consistently lost value against major reserve currencies. As a result, even large nominal gains in rupee terms may not be worth much in foreign currency terms." He argued that real estate is a fixed investment that is more risky since it doesn't let investors readily change or hedge their positions like stocks or other tradable assets do.

Currency exposure is the most important part of the investment outcome. Samant states, "The asset must appreciate at a rate higher than this threshold to keep its value in dollar terms," because the rupee loses value against the dollar by an average of 2% to 3% a year.

When returned, any performance below this benchmark leads to real capital loss.

You can only make sense of the return comparison after taking into account taxes and currencies. "An annual rise in rupees of 4% to 5% can drop to about 1% to 2% in dollars after taking into account a 2% to 3% drop in currency value, before taxes." Samant notes, "On the other hand, diversified global portfolios that grow at 7% to 9% in dollars have a much better risk-adjusted return profile."

So, when NRIs invest in Indian property, their returns depend on both the value of the property going up and the value of the currency going up. If the rupee loses value compared to their native currency, gains in rupee terms become less valuable when they are changed back, which lowers the overall returns in foreign currency.

In September 2022, an NRI living in the US bought a house in India for ₹20 crore. Prices of real estate in India went grown by around 5% every year, thus the property is worth about ₹23.7 crore by April 2026. That looks like a solid local gain. One dollar used to be ₹83, but now it's ₹93. The value of the property in dollars has hardly gone up because the rupee is weaker. So, even though the NRI sees a clear rise in India, the return looks much smaller when you change it to dollars. Changes in currency have eaten into the gain.

The best way for an NRI to invest is to do so with a long-term view, focus on high-quality assets in top markets, stagger investments instead of putting them all in at once, and balance returns by getting rental income and capital appreciation. Pandey says, "Currency cycles change, but strong underlying real estate fundamentals can help offset volatility over time."

"Vacancy periods or delayed rentals can lower yield, and you also need to think about transaction costs and capital gains taxes when you leave." Pandey says, "Investors should look at total holding costs, not just headline appreciation, to figure out real returns."

From a portfolio point of view, buying something like this often doesn't help NRIs diversify their investments and can make them more concentrated and risky.

A single high-value home increases the risk of concentration. It is subject to a particular region, regulatory framework, and market cycle, and it is also intrinsically illiquid and indivisible.

Samant says, "From a portfolio construction point of view, it limits flexibility and doesn't give the diversification benefits that come with a wider allocation across asset classes and jurisdictions."

Source: Hindustan Times