NRI in Dubai Explains Why He Won't Buy a Third Property in India
A Reddit user has shared a detailed account of why he, a Dubai-based NRI, will not buy a third property in India. Despite the initial allure of Indian real estate, the hidden costs and logistical challenges have made him reconsider his investment strategy.
The NRI, who owns properties in Hyderabad and Bengaluru, began by highlighting the apparent attractiveness of Indian real estate on paper. “I'm an NRI in Dubai. I own 2 properties in India. Won't be buying a third. Here's why,” he wrote. He explained that while his properties in Hyderabad and Bengaluru appear to be doing well on paper, the reality is far more complex.
One of the primary issues he highlighted is the low net rental yield. “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,” he noted. This discrepancy in returns makes the investment less attractive compared to other financial instruments.
Another significant challenge is the attitude of tenants towards NRI landlords. “The tenants hate NRI landlords,” he claimed. He found it difficult to find reliable tenants willing to rent from an NRI due to the complicated tax processes involved.
Currency fluctuations also play a crucial role in his decision. “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,” he pointed out. The depreciation of the Indian Rupee against the US Dollar has significantly impacted his returns.
The administrative and legal hurdles are equally daunting. “The exit is a nightmare,” he stated. He described the process of selling a property and repatriating the funds as a bureaucratic nightmare, involving the deduction of 20% TDS by the buyer, which must then be refunded after filing tax returns. Any mistake in this process can result in a tax notice.
Social media reactions to his post were mixed. One commenter wrote, “NRIs buying apartments 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.”
Another user expressed gratitude for the post, saying, “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.”
A third commenter suggested, “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.”
A fourth user added, “Thank God at least we can peacefully buy one home to live in. These greedy NRIs buying five to ten flats and plots have made real estate unaffordable—not just for investment, but even for basic living.”
The NRI concluded, “Property won on paper. But for the illiquidity, the headache, the currency drag, and the exit pain? Just not worth it for me.” His experience serves as a cautionary tale for other NRIs considering real estate investments in India.
