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Bought For Rs 64 Lakh In 2010, Hyderabad Flat Gives 0.5% Return: NRI's Costly Real Estate Investment Lesson
- An NRI couple's real estate investment in a Hyderabad flat purchased in 2010 for Rs 64 lakh yielded only a 0.5% annualized return in USD terms over 15 years.
- They faced challenges including currency depreciation, low rental yield, and opportunity costs impacting their real estate returns.
- The couple bought a 3BHK flat in Hyderabad and sold it in 2024 for Rs 90 lakh after delays in possession and a tepid resale price.
- The deal initially seemed profitable, but after expenses, they netted only Rs 84.9 lakh, including rental income of Rs 7.2 lakh.
- Currency exchange rate fluctuations and opportunity costs diminished their returns substantially.
- Had they invested in the S&P 500 index fund, they estimated their gains would have exceeded $3,30,000, highlighting the opportunity cost.
- Challenges included property maintenance from abroad, low rental returns, liquidity issues, and underperformance of the location.
- The NRI investor outlined key takeaways including the importance of considering USD-adjusted gains, opportunity costs, cash flow over capital gains, avoiding investments based on hype, and thorough financial analysis before real estate investments.
- The experience underscores the realization that Indian real estate may not always be financially rewarding due to various factors impacting NRI investments.
- In conclusion, the investor stressed the importance of being mathematically prudent in real estate investments.
- The real estate investment experience serves as a cautionary tale for NRIs navigating the complexities and challenges of real estate investments in India.
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