News: Rs 20 Crore Luxury Homes for NRIs: Currency and Cost Risks-21-04-2026
Luxury property worth over Rs 20 crore can reward non-resident Indians, but financial experts say the headline gains hide recurring costs and currency risk that sharply reduce what an investor finally takes home.
Tushar Kumar, advocate, Supreme Court of India, said an emotional purchase is usually driven by prestige, a prime address, architectural indulgence or family association, and often comes with sub-optimal yields and no exit strategy. A sound investment must stand up to objective tests such as rental yield, comparable market data, identifiable demand drivers and a clear path to liquidity.
Madhura Samant, partner, Elarra Law Offices, said the key question is whether the case holds independent of personal use. If the purchase is driven by family needs, legacy or convenience, it is better classified as consumption. An investment needs a clear return thesis, a defined holding period and a credible exit.
Costs erode returns at every stage. Stamp duty, registration and brokerage are a heavy upfront drag. Maintenance, vacancy, property management for absentee owners and periodic repairs cut net yield. In premium developments, sinking fund contributions, property taxes, insurance and refurbishment add to the load. On exit, Kumar said, capital gains tax and illiquidity discounts reduce realised returns further, so such assets often need substantial appreciation just to preserve real value.
Currency is central. Kumar said the rupee has shown a consistent depreciation bias against major reserve currencies, so appreciable rupee gains may become modest or negligible in foreign currency. Property, unlike stocks, cannot be easily adjusted or hedged, he added. Samant said that with the rupee losing an average of 2% to 3% a year against the dollar, the asset must appreciate faster than that to hold its dollar value. Annual appreciation of 4% to 5% in rupees can shrink to about 1% to 2% in dollars before taxes, she said, whereas diversified global portfolios compounding at 7% to 9% in dollars offer a materially stronger risk-adjusted profile.
Two illustrations make the point. An NRI in the US who bought a Rs 20 crore property in September 2022 would, at about 5% yearly growth, hold an asset worth around Rs 23.7 crore by April 2026. But the dollar has moved from Rs 83 to Rs 93, so the value in dollar terms has hardly risen. Rahul Chaturvedi, a London-based NRI, invested Rs 22 crore in a Mumbai apartment, around Rs 23.8 crore with duties. Over five years, appreciation of around 5% and some rent supported returns, though maintenance and currency movement moderated gains in dollar terms. The investment may not have beaten diversified global assets, but it delivered appreciation, diversification and personal utility.
Pratyush Pandey, founder of real estate consultancy AARE Consulting, took a more positive view. He said Indian luxury housing is increasingly competitive with global options, since a stronger dollar or dirham raises NRI purchasing power, entry costs are lower and appreciation potential in Mumbai, Delhi-NCR and Bengaluru is stronger, while many mature markets offer lower yields and limited upside. He advised a long-term horizon, high-quality assets in prime markets, staggered investment and a balance of rental income and capital appreciation. Investors should assess total holding costs, not just headline appreciation, he said.
On portfolio construction, Samant said a single high-value home creates concentration risk, being tied to one geography, regulatory framework and market cycle, and is illiquid and indivisible. It limits flexibility and lacks the diversification benefits of a broader allocation across asset classes and jurisdictions.
