Indian property is an NRI favourite—but is it the smartest way to build wealth?

Property has long been the comfort zone for overseas Indians. But as India’s financial markets deepen and new investment avenues emerge, wealth advisers say NRIs may need to think beyond the familiar four walls.

For years, buying a home in India has been almost synonymous with investing for many Non-Resident Indians (NRIs). A flat in Mumbai, Delhi, Bengaluru or another major city has represented not just an investment, but also a tangible connection to the country they left behind.

That preference, however, is beginning to evolve.


A survey by SBNRI released in July found that 52% of NRIs now consider India’s commercial real estate (CRE) a key part of their investment strategy, signalling a shift from the traditional preference for residential property. The emergence of fractional ownership models is also opening up commercial real estate to a wider pool of overseas investors.

But the bigger question is not whether NRIs should invest in real estate. It is why property continues to occupy such a large place in their wealth portfolios when there are equities, bonds, mutual funds and other financial assets available.

According to Alekh Yadav, Head of Investment Products at Sanctum Wealth, the answer begins with something that has little to do with spreadsheets: familiarity and emotional comfort.

“For many NRIs, a flat in India feels tangible, familiar, and something they can eventually pass on to their family,” Yadav said.

That emotional connection is important. A property is visible, physical and relatively easy to understand. A financial portfolio, by contrast, can appear more abstract, particularly to an investor who lives thousands of kilometres away from India.

Rohit Sarin, Co-Founder of Client Associates, points to the same behavioural dynamic. Property, he said, is tangible, familiar and emotionally connected to the idea of home, while a financial portfolio is much less visible and can therefore feel less intuitive.

This helps explain why an NRI who may be perfectly comfortable earning in dollars, pounds or dirhams can still gravitate towards buying another apartment in India rather than allocating a larger portion of wealth to financial assets.

But diversification remains the bigger issue:

The 10x property-return illusion

One of the most common arguments for holding property over long periods is that it appreciates substantially.

And on the surface, the numbers can look compelling.

A property that becomes 10 times its original value over 20 years sounds like an extraordinary investment.

But Yadav highlights an important mathematical distinction: that translates to a compounded annual growth rate (CAGR) of roughly 12.2%, before accounting for maintenance, taxes and other expenses.

Once these costs are factored in, the investor's actual return can be meaningfully lower.

The point is not that 12.2% is a poor return. Rather, it is that investors can sometimes overestimate the performance of property because they focus on the headline increase in value rather than the annualised, net return.

This becomes particularly relevant for wealthy NRIs who may hold multiple properties across cities.

A ₹5 crore apartment becoming ₹10 crore may feel like a clear wealth-creation success. But if a large portion of the investor's overall wealth is sitting in one or two properties, the headline appreciation needs to be weighed against the opportunity cost, transaction costs, taxes, maintenance expenses and, importantly, liquidity.

The concentration problem:

This is where financial advisers see the biggest risk.

Real estate can certainly have a place in an NRI's portfolio. The problem arises when real estate becomes the portfolio.

“Putting a significant portion of wealth into one or two properties creates concentration and liquidity risks,” Yadav said.

Unlike listed equities or bonds, property cannot generally be sold instantly when an investor needs cash or wants to rebalance a portfolio. Selling can take time, involve substantial transaction costs and may depend heavily on the local market and the specific property's characteristics.

There is also concentration risk.

An investor who owns two apartments in the same city may believe they have diversified because they own two properties. From a portfolio perspective, however, they may still be exposed to the same local economic cycle, property market and regulatory environment.

Sarin similarly cautions that a property-heavy approach can leave a significant portion of wealth concentrated and illiquid.

For wealthy NRIs, therefore, the question should perhaps not be property versus financial assets, but how much property makes sense within the overall portfolio.

India exposure doesn't have to mean real estate:

The broader investment opportunity in India has also changed significantly.

NRIs today can access a much wider range of financial assets than in the past. Indian equities, mutual funds, bonds and other investment products can provide exposure to the country's economic growth without requiring investors to physically own an asset.

Sarin believes India's investment opportunity extends well beyond real estate. Given his current overweight view on Indian equities, he argues that NRIs can participate in India's growth through listed equities and other financial assets as well.

This does not mean abandoning property.

For an NRI with family ties to India, a desire for a physical home or a long-term view on Indian real estate, property can remain an important part of wealth creation. Commercial real estate can also offer a more investment-oriented avenue than a purely residential purchase.

The distinction is between owning property as part of a portfolio and building a portfolio around property.

The portfolio mindset:

Perhaps the biggest change required is behavioural. Property feels safe partly because it is tangible. You can see it, visit it and eventually pass it on to your children. A diversified portfolio does not offer that same emotional reassurance.

But wealth creation is ultimately about more than owning assets that feel familiar.

For wealthy NRIs, Yadav believes a diversified portfolio with disciplined asset allocation can provide a stronger foundation, with Indian real estate treated as one component rather than the entire investment strategy.

That means asking a different set of questions before buying the next property:

How much of my overall wealth is already in real estate?

How quickly can I access this money if I need it?

What is my actual return after taxes, maintenance and other costs?

Am I buying this property because the investment case is compelling—or because it feels familiar?

And perhaps most importantly -

What am I giving up by putting another large chunk of capital into property?

For NRIs, India's real estate story is clearly becoming more sophisticated. The growing preference for commercial real estate and the emergence of fractional ownership suggest that the market is moving beyond the traditional residential purchase.

But sophistication in investing is not simply about finding a new type of property. It is about understanding where that property fits within the larger wealth portfolio.

For investors who have accumulated substantial wealth overseas, the next phase of India's investment story may therefore be less about buying more property—and more about learning to balance the comfort of the familiar with the benefits of diversification.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)