With Indian real estate prices—especially in metro cities like Bangalore—witnessing rapid appreciation, many non-resident Indians (NRIs) face a crucial decision: Should they invest in physical property now or wait until they relocate to India?
This question becomes even more pressing for individuals with a significant investable corpus, as seen in the case of a 29-year-old NRI planning a return in two years. With a projected corpus of ₹3 crore, he is evaluating whether to allocate ₹1 crore toward buying a house in Bangalore now or defer the decision until his job location is finalized.
Financial experts weigh in on the pros and cons, offering a blend of real estate insights, investment strategy, and market timing.
The Investor’s Current Plan
- Age: 29
- Timeframe to Return to India: 2 years
- Estimated Corpus at Return: ₹3 crore
- Proposed Allocation:
- ₹1 crore for a property down payment
- ₹2 crore for investments:
- 60% in fixed deposits and debt mutual funds
- 40% in hybrid and equity mutual funds
- Monthly Income Goal Post-Return: ₹1–1.5 lakh (low-risk, steady returns)
The Real Estate Dilemma
The investor is torn between leveraging his current foreign income to buy property now—particularly in Bangalore, where prices have surged in recent years—or waiting until his return, even if it means paying a premium later.
Pros of Buying Now:
- Utilize strong foreign income to qualify for a home loan.
- Start building home equity through EMIs.
- Lock in property before prices climb further.
Cons of Buying Now:
- No clarity on future job location (could be Chennai or elsewhere).
- Risk of holding a high-value property that may not be personally useful.
- Might still need to rent another home, reducing the property’s utility.
Expert Insight: Don’t Let FOMO Drive Your Investment
“Buying a house in Bangalore now, without clarity on where you’ll finally settle, may leave you with a high-value asset that doesn’t align with your lifestyle or job,” says Akhil Rathi, Head – Financial Advisory at 1 Finance. “Property decisions should ideally be driven by personal use or rental returns—not fear of rising prices alone.”
REITs: A Smarter, More Flexible Alternative?
Real Estate Investment Trusts (REITs) offer exposure to the real estate market without the burden of physical ownership.
Why Consider REITs:
- Regulated by SEBI, ensuring transparency.
- Offer 5–7% rental income-like yields.
- Require lower capital to start investing.
- Units can be traded easily, offering liquidity.
- Diversified across commercial assets like office buildings and malls.
“REITs let you benefit from India’s real estate growth while maintaining liquidity and avoiding location-locked decisions,” explains Rathi.
Long-Term Investment Strategy
To meet the post-return goal of earning ₹1–1.5 lakh/month:
- Stick with a conservative split initially: 60% debt, 40% hybrid/equity.
- Gradually increase equity exposure post-relocation to 50–55%.
- Implement SWPs (Systematic Withdrawal Plans) from mutual funds to generate tax-efficient monthly income.
- Avoid premature large real estate investments until the location of residence is confirmed.
Quick Summary Table: Investment Strategy at a Glance
| Factor | Details |
|---|---|
| Estimated Corpus | ₹3 crore |
| Down Payment Considered | ₹1 crore |
| Investment Allocation | 60% debt, 40% equity/hybrid |
| Monthly Income Goal | ₹1–1.5 lakh |
| REIT Yield Range | 5–7% (approx.) |
| Alternative to Physical Asset | REITs (SEBI-regulated, liquid, rental-income style) |
| Return Strategy | Use SWPs for stable cash flow post-return |
FAQs: NRI Real Estate Investment Decision
1. Should NRIs invest in Indian property while still abroad?
Answer: Only if the future location is certain. Buying without clarity may result in a property that isn’t useful or aligned with your lifestyle.
2. Is ₹1 crore enough to buy property in Bangalore?
Answer: In many prime areas, ₹1 crore may not suffice for full ownership. However, it can serve as a down payment for properties in emerging suburbs.
3. What are the risks of investing in real estate now?
Answer: Main risks include location mismatch, poor rental yield, and lack of flexibility. Selling property later can also be time-consuming.
4. What’s the benefit of REITs over direct property?
Answer: REITs offer regular income, diversification, liquidity, and ease of entry/exit—ideal for those unsure of long-term settlement plans.
5. How can NRIs generate steady income post-return?
Answer: A mix of SWPs from mutual funds and conservative fixed-income instruments can generate monthly income, with gradual equity exposure for growth.