Buying a property in India

For those living in India, where the INR is the de-facto currency for the locals for all practical purposes ( unless one travels very frequently has exports business etc..), buying the first house is a no-brainer. Tax breaking, plus a "roof over your top" makes it a compelling reason.

However, for those of us who live outside, and consider investing in property in India, the considerations are manifold:

1. If you are a US or Canadian or Australian resident, then you have to declare the Indian property as a global asset and pay the applicable wealth or estate tax.
2. Interest rates in India are pathetically high over the long term... right now they hover around the 12 to 14% mark. Compare that with the 7% in Australia, 5.8% in the USA(effective) and about 22% in Singapore where I live... 
3. Monthly EMI cannot be covered by rentals. For example, if you invest in a 1.25 crores property, assuming 80% loan, the EMI on the 1Cr comes roughly to about Rs. 1,11,000. The likely market rental? Probably about 30K pre-tax. Post tax could be around the 26K mark, roughly.  And this excludes ongoing costs like society fees, maintenance, insurance, repairs, property tax, upgrades etc....not to mention the hassles of getting someone for rent, contract management, getting him to evict on time after contract lapses etc... 
4. The real clincher though is the exchange rate slide. 3 years ago, the Singapore dollar got you Rs.27, today it gets Rs.41. So, if you had invested in a property by sending money from Singapore to India 3 years go, and thought you made a nice 30% up move, think again.

Nett of it, the first house should be a no-brainer for most of us. Anything more, think twice, and weigh the pros and cons, and the options in front you as  global citizen.