Currency depreciation undermines high-value real estate returns for NRIs despite property price surge
As NRI investments in Indian real estate reach new heights, a silent but powerful factor—rupee depreciation—is diminishing actual returns in dollar terms. A real-life example shows how a flat in Pune that doubled in rupee value between 2010 and 2024 generated merely a 3% return when measured in US dollars, reported businesstoday.in.
Veteran banker and entrepreneur Sai Sankar M highlighted that while NRIs accounted for 15%–25% of residential investments across India’s top seven cities in 2024, the dollar-adjusted returns tell a less optimistic story.
Despite 122% appreciation in INR, a Pune flat earned just 3% in USD over 14 years—an eye-opener for NRI investors facing the currency depreciation trap
The case in point: In 2010, an NRI bought a flat in Pune for ₹40 lakh and spent ₹5 lakh on interiors. At the then exchange rate of ₹45/USD, this ₹45 lakh investment translated to around $100,000. Fast-forward to 2024, the flat sold for ₹1 crore. After a capital gains tax of ₹12.5 lakh, the net proceeds were ₹87.5 lakh—worth only around $102,941 at the current exchange rate of ₹85/USD.
The bottom line? A mere 3% gain in USD terms over 14 years—less than 0.2% annually, and significantly below inflation in most developed countries. This highlights how currency erosion can wipe out apparent real estate profits for NRIs.
The rupee’s slide from ₹45 to ₹85 per USD since 2010—a 47% drop—means that unless a property appreciates far more than this fall, real gains remain elusive. For sentimental investors looking to leave a legacy or return home, this may not matter. But for financially-driven NRIs, it’s a wake-up call.
Experts suggest alternatives like investments via GIFT City, which allow foreign currency-denominated assets such as global mutual funds and bonds. These instruments offer returns in stable currencies, better hedge against depreciation, and involve minimal Indian tax exposure or regulatory hurdles.
While owning a home in India offers emotional satisfaction, experts urge NRIs to assess returns with a financial lens. Emotional factors must be weighed against opportunity cost, tax burdens, and the erosion caused by currency fluctuation.
A strategic, well-researched approach—rather than emotional impulse—can ensure that NRIs make the most of their wealth, whether in Indian real estate or alternative global investment opportunities.
