As Rupee hits new low, Dubai-based NRI shares downside of investing in property in India: ‘The yield is embarrassing’

Amid the prolonged tensions between the United States and Iran, rupee has hit a new low on 5 May. But how has it impacted NRIs? A user on Reddit warned against investing in Indian real estate, as although it looks like a smart move for NRIs, the hidden costs and logistical issues tell a different story.

Dubai-NRI on not investing in Indian properties

The post is shared by a NRI who is based in Dubai. Sharing his own experience of owning properties in Hyderabad and Bangalore, the user reasoned that he wouldn't buy a third property in the country right now. “I'm an NRI in Dubai. I own 2 properties in India. Won't be buying a third. Here's why,” the user wrote.

From low net rental yields of just 2–3% to the administrative hassles of managing tenant TDS and other repatriation paperwork, the NRI shared how his investment has been impacted by the ongoing currency fluctuations.

The individual added, “Bought one in Hyderabad. One in Bangalore. Both tenanted. Both ‘doing well on paper.’ Here's the honest math nobody told me before I bought. The yield is embarrassing. Net rental yield after maintenance, society charges and property tax is 2 to 3%. My UAE savings account pays 4%. Cool.”

The user went on to claim that tenants usually don't like NRI landlords. He alleged that it is problematic to find people to rent the properties because of “complicated” tax work.

“The currency is quietly killing you. USD/INR was 83 two years ago. It's 95 today. That's 14% gone before you've even done anything. The exit is a nightmare.”

The post also mentioned, “Property won on paper. But for the illiquidity, the headache, the currency drag and the exit pain? Just not worth it for me,” adding, “Property won on paper. But for the illiquidity, the headache, the currency drag and the exit pain? Just not worth it for me.”

Netizens react

Reacting to the post, many in the comments agreed to the issue. One of them said, "NRIs buying apartments and or end-use properties in India as an investment is just plain stupid. If you hold your money in dollars or any of the stable currencies, the returns will beat most of your investment in properties. And as you mentioned, selling and withdrawing your money is nothing short of a nightmare. The buyer has to deduct 20% TDS, which you then refund after filing returns and then file forms to transfer money to the NRE account. Any mistake and you can get a tax notice.”

Another one added, “Thank you so much for making this post. This will discourage NRI buyers from investing in Indian real estate. By this, the cost might come down so we can afford a home.”

Someone else said, “I suggest only one property in India for only NRIs in Dubai or the US because neither of them gives permanent residencies or citizenship. It does not make sense for the NRIs in the UK or Canada, where they can get citizenship and own homes.”

(Disclaimer: This report is based on user-generated content from social media. Live Mint did not independently verify the claims and does not endorse them.)