Global Property Returns: How India’s Real Estate ROI Stacks Up Against the West

By Lodha

Real estate investment has long been considered a dependable pillar of wealth creation. Yet, the true return on investment (ROI) in real estate is rarely uniform—it is shaped by geography, taxation, regulation, inflation, and currency movements. Between 2019 and 2024, the performance of real estate markets in India, the USA, the UK, and Australia has diverged meaningfully. This blog explores these contrasts, comparing residential and commercial yields, capital appreciation, tax regimes, and broader economic conditions to assess where investors found the best value—and where opportunities may lie ahead.

Understanding Real Estate ROI: Yield + Appreciation

At its core, real estate ROI is defined by two principal elements: rental yield—the annual rental income as a percentage of property value—and capital appreciation, or the growth in property prices over time. A market’s ROI is thus a delicate balance between consistent income and long-term value creation.

Real Estate India: Rental Yields with Steady Income and Different Stories

India’s residential rental yields hover between 4.5–5%, comparatively modest when measured against global peers. Flats for sale in Mumbai and Delhi, and the real estate scene in these urban centres, suffers from inflated price-to-rent ratios, which often make ownership more favourable for end-users than for investors seeking income.

Contrast this with the USA and UK, where residential yields average around 6–6.5%. These markets benefit from more rational price alignments, particularly in suburban or regional cities. Australia, meanwhile, posts yields closer to 5%, bolstered by robust demand in growing metros.

In commercial sectors, however, India performs admirably. Grade A offices in Bangalore real estate, as well as in Hyderabad, yield between 5–7%, drawing heightened interest post-REIT implementation. Commercial yields in the USA (5.3–6.4%), UK (4–6%), and Australia (5–6%) also remain resilient, with industrial and logistics assets leading returns amid global e-commerce growth.

Capital Appreciation: A Mixed Bag

When examining capital appreciation from 2019–2024, the USA leads with a 53% nominal rise in residential property values, propelled by low interest rates and a post-pandemic housing surge. Australia follows at 44%, despite a correction post-2021. The UK posted 24%, while India saw a muted 17% gain.

Inflation-adjusted, or real appreciation, tells a more sobering story:

USA: +25%

Australia: +20%

UK: 0% (wiped out by inflation)

India: -9% (nominal gains eroded by high inflation and currency depreciation)

Commercial property, too, reflects this divergence. While the USA saw a modest 5% net increase, the UK experienced a 22% drop in capital values between 2022–23, largely due to borrowing cost spikes. In India, commercial appreciation was modest but consistent, supported by REITs and foreign institutional investment, particularly in Tier 1 cities i.e. Bangalore, Delhi and Mumbai real estate. Australia’s office sector saw a post-peak decline, though logistics remained buoyant.

Taxation and its Effect on ROI

In India, real estate investors face a relatively low property tax burden (0.5–1%) and benefit from a 30% flat deduction on rental income, with long-term capital gains taxed at 20% with indexation. This simplicity is attractive but doesn’t offset lower real returns.

In contrast:

USA offers the most comprehensive tax benefits, including deductions for depreciation, mortgage interest, and the 1031 exchange deferral.

The UK imposes high taxes on second homes and foreign buyers, with limited mortgage relief.

Australia supports long-term holding via negative gearing and a 50% capital gains discount after 12 months.

Regulatory & Economic Considerations

India’s real estate investment sector has made commendable progress in transparency, thanks to RERA and REITs, but still contends with bureaucratic hurdles and title clarity issues. The NBFC crisis, coupled with high inflation and repo rate hikes (now at ~6.5%), has dampened short-term sentiment.

Meanwhile:

The USA’s investor-friendly legal environment, coupled with a landlord-positive framework, has ensured stable ROI despite recent interest rate hikes.

The UK faces policy friction—from Brexit to tax reforms—which has diminished ROI.

Australia’s supportive tax laws, growing population, and supply shortages make it a promising long-term bet.

The Currency & Inflation Equation

For foreign investors, real ROI hinges heavily on currency performance:

INR depreciated ~18% against USD (2019–2024), nullifying India’s nominal gains.

USD remained strong, protecting real value in the USA.

GBP and AUD depreciated ~5%, but less dramatically.

Inflation in India (~25%) outpaced that of Australia and the USA, compounding the challenge.

REITs: Levelling the Playing Field

India’s REIT regime, launched in 2019, has allowed retail investors to participate in commercial property gains, offering greater liquidity and transparency. However, REITs in the USA and Australia are far more mature, often yielding 4–6% with stock market tradability. While REITs may not dramatically enhance yields, they provide accessible, regulated exposure to income-generating assets.

Beyond ROI: Weighing Risk, Access, and Ease

Pure returns are only one side of the equation. India, despite its potential, still struggles with longer transaction timelines, legal delays, and ambiguity in land titles. Western markets offer superior asset security, smoother processes, and reliable exit mechanisms—factors often more critical to foreign investors than a few additional percentage points in ROI.

The Outlook: 2025–2030

Looking ahead:

India may see improving ROI as formalisation increases, REITs mature, and digital land reforms take hold.

The USA will likely continue to offer robust rental returns, particularly in logistics and suburban residential segments.

The UK may remain stable but uninspiring due to inflation and regulation.

Australia could rebound modestly, driven by immigration and chronic housing undersupply.

Conclusion: A Balancing Act

Between 2019 and 2024, India offered affordability and regulatory strides, but saw weaker real ROI due to inflation and currency depreciation. The USA emerged as the top performer, blending appreciation, yield, and currency strength. Australia balanced growth and policy support, while the UK faced structural headwinds.

Ultimately, the best market depends on the investor’s objectives. For stable income in a strong currency, the USA or Australia stands out. For long-term capital growth with rising transparency, India remains a market to watch—especially as reforms continue to mature.

For discerning investors seeking to capitalise on India’s future potential while relying on the assurance of world-class design, governance, and execution, Lodha, one of the top real estate companies in India, represents a trusted partner. With a legacy of delivering landmark developments and pioneering platforms such as REIT-ready commercial assets and digitally-enabled living, Lodha is shaping the next chapter of real estate in India—one built on confidence, credibility, and long-term value.