NRI · The decision · The Propah POV

Plot, apartment or commercial — which suits an NRI?

Lakshita Sanwal· Founder, Propah Realty, Bengaluru· Last reviewed: 6 September 2026· 14 min read

Plots appreciate hardest and pay nothing. Commercial yields most and is hardest to exit. Apartments do neither best and are the only one you can manage badly and still recover from. For someone abroad the deciding factor is not return — it is how much attention each one demands, and how visible neglect is from 8,000 kilometres.

The three, side by side

	Plot	Apartment	Commercial
Rental yield	Nil until built	3–5% gross, ~2% net after tax	6–10% gross
5-year appreciation, Bengaluru	55–120% by corridor	50–90% by corridor	Varies widely by asset
Max loan-to-value	~70%	75–80%	Lower, and harder for an NRI
Loan interest	0.25–0.75% above home loan	Baseline	Higher again
Tax deduction on interest	None until construction	Yes — uncapped if let out	Yes, if let out
Annual carrying cost	Property tax only, ₹1–5k	₹36k–96k maintenance plus tax	Usually borne by the tenant
Liquidity	Slower	Highest	Slowest
Risk if unattended	Encroachment	Deterioration, occupation	Vacancy, and it is expensive

The question is not which returns most. It is which one you can own badly and still be fine.

Plots: the highest appreciation, and the highest attention

Published Bengaluru data for 2021–2026 puts plot appreciation ahead of apartments in every zone — roughly 85–120% in the north against 65–90% for apartments there, and a similar gap in the east and south. Over ten years or more, plots are commonly described as outperforming by 15–25 percentage points in appreciating corridors, for the simple reason that land is finite and floors are not.

Now the other side, which matters more for an NRI than for a resident.

No income, ever, until you build. Every year of holding is funded from your pocket. There is no rent to offset the carrying cost, and no tenant to notice a problem.
Financing is worse. Around 70% loan-to-value against 75–80% for an apartment, at a higher rate, with no interest deduction until construction begins. Some lenders are reluctant to fund plots for NRI borrowers at all.
Encroachment is the specific risk of unbuilt land, and it is precisely the risk that distance makes worse. An unwatched plot is the most exposed asset an NRI can own.
Diligence is harder. Conversion order, layout approval from the authority with actual jurisdiction, and a thirty-year encumbrance certificate — the vocabulary is here, and "DC converted" on a hoarding is a necessary condition, not a sufficient one.
Agricultural land is not available to you at all, whatever the seller says. The rule is absolute.

Plots reward patience and punish absence. That is an awkward combination for someone who is absent by definition.

Commercial: the best yield, and the worst failure mode

Commercial gross yields of 6–10% against 3–5% residential are not a small difference, and tenants typically bear maintenance. Leases run longer, which means less churn.

What the yield is compensating you for:

Vacancy is catastrophic rather than annoying. A residential flat re-lets in weeks. A commercial unit can sit empty for many months, and you carry it the whole time.
Rents can fall sharply in a downturn, where residential rents are stickier.
Liquidity is the worst of the three. The buyer pool is smaller and more discerning, and an exit takes longer.
The ticket is larger. Meaningful commercial assets start well above a typical residential entry point, which concentrates risk in one tenant and one building.
Financing is harder for an NRI, at lower LTV and higher rates.

For an NRI who wants commercial exposure without the concentration, REITs deserve a proper look — listed units trade from a few thousand rupees with distribution yields typically quoted around 6–8%, diversified across many buildings and liquid. The comparison is set out here. What they do not give you is leverage, which is where much of the return in direct property comes from.

Apartments: nobody’s best answer, and usually the right one

An apartment wins no category on the table. It appreciates less than a plot, yields less than commercial, and carries ₹36,000–96,000 a year of maintenance that neither of the others does in the same way.

It wins on the things that actually decide outcomes for an absent owner:

It produces income from day one, so the asset partly funds itself.
Someone is in it. A tenant is a free monitoring system — leaks, disputes and encroachment are reported to you rather than discovered by you.
It is the most liquid of the three, which matters most on the day you need it to matter.
Financing is best, and interest on a let-out property is deductible in full.
It is manageable at a distance, professionally and cheaply, because the market for doing so exists.

Be clear-eyed about what you get: net yield after costs and tax runs around 2% on all-in cost. The apartment case is not an income case. It is a leveraged appreciation case with an income floor and a monitoring system attached.

How we would actually choose

Match the asset to your situation, not to the return table

First Indian property, living abroad, no trusted person on the ground — apartment. Almost without exception. Learn the market with the asset that forgives mistakes.
Long horizon, reliable family in the same city, no need for income — a plot becomes reasonable, provided someone will physically visit it and the title work is done properly rather than quickly.
Larger capital, existing residential exposure, real appetite for vacancy risk — commercial can earn its place, ideally after you already own something simpler.
You want commercial yield without commercial risk — that is what REITs are for, and there is no shame in the liquid version.
You want the highest number on a page — that is how people end up owning an unbuilt plot in a corridor they have never walked, funded by a loan with no tax benefit. The highest number is not the objective.

The question underneath all three

Every one of these assets is a bet on the same two things: the corridor and the entry price. A plot in a stagnant corridor loses to an apartment in a growing one. An apartment bought 15% above the achievable price loses a year of appreciation on day one.

So settle those before the asset type. Which price you were quoted, and whether the infrastructure is committed but not yet delivered, will move your outcome more than choosing between these three ever will.

What this does not cover

Appreciation figures are published Bengaluru ranges for 2021–2026 by zone and are historical, not forecasts. Corridor selection drives more of the variance than asset type.
Yield ranges are market guidance and vary widely by asset, tenant and location.
Lender appetite for plot and commercial lending to NRIs differs materially by institution; confirm before assuming financing.
Commercial leasing, lock-ins, escalation structures and fit-out obligations are not addressed and materially affect returns.
This is general market commentary, not investment advice. We are a real estate advisory, not financial advisers.

Should an NRI buy a plot or an apartment in India?

For a first Indian property bought from abroad, an apartment, almost without exception. Plots have appreciated faster — published Bengaluru data shows 85–120% over 2021–2026 in the north against 65–90% for apartments — but they produce no income, attract only about 70% loan-to-value at a higher rate with no interest deduction until construction, and carry encroachment risk that distance makes worse. An apartment produces income from day one and puts a tenant in it who notices problems for you.

Is commercial property better than residential for an NRI?

It yields far better — 6–10% gross against 3–5% residential, with tenants typically bearing maintenance and longer leases meaning less churn. What that yield compensates for is vacancy that is catastrophic rather than annoying, rents that fall sharply in a downturn, the worst liquidity of the three, a much larger ticket concentrating risk in one tenant and one building, and harder financing for a non-resident. It suits an investor who already owns something simpler and can genuinely absorb a long void.

Do plots appreciate more than apartments in Bangalore?

Historically yes. Published 2021–2026 figures put North Bangalore plots at 85–120% against apartments at 65–90%, with similar gaps in the east and south, and plots are commonly described as outperforming by 15–25 percentage points over ten years or more in appreciating corridors — because land is finite and floors are not. But that is historical and corridor-dependent: a plot in a stagnant corridor loses to an apartment in a growing one.

Can an NRI get a loan to buy a plot in India?

Often, but on worse terms and not from every lender. Expect around 70% loan-to-value against 75–80% for an apartment, at roughly 0.25–0.75% higher interest, and with no section 24(b) interest deduction until construction begins. Some lenders are reluctant to fund plots for NRI borrowers at all. Total financing cost is commonly cited as 15–20% higher than for an equivalent apartment purchase.

What are the risks of an NRI buying a plot?

Encroachment above all — unbuilt land with nobody watching it is the most exposed asset a non-resident can own. Beyond that: no income to offset carrying cost, harder financing, no tax deduction until you build, slower resale, and materially harder diligence. You must verify the conversion order, layout approval from the authority with actual jurisdiction, and a thirty-year encumbrance certificate. And agricultural land cannot be bought by an NRI at all, whatever a seller suggests.

What does an apartment actually net an NRI after tax?

Around 2% on all-in cost. Gross yields run 3–5%, but vacancy, maintenance of roughly ₹36,000–96,000 a year, property tax, repairs and income tax take it down substantially, and stamp duty and registration raise the cost base the yield is measured against. Add professional management at 8–10% of rent and it falls further. The apartment case is not an income case — it is leveraged appreciation with an income floor and a tenant who tells you when something breaks.

Are REITs a better way for an NRI to get commercial exposure?

For many, yes. Listed REIT units trade from a few thousand rupees, spread you across many buildings rather than one tenant, are liquid on an exchange, and quote distribution yields typically around 6–8% — better income than a residential flat with none of the vacancy concentration of a single commercial unit. What they cannot give you is leverage, which is where much of the return in direct property comes from. Which matters more depends on whether you want income and liquidity or long-horizon leveraged growth.

Which matters more, the asset type or the location?

The corridor and the entry price, by a wide margin. All three asset types are bets on the same two things. A plot in a stagnant corridor loses to an apartment in a growing one, and an apartment bought 15% above the achievable price gives away a year of appreciation on the day you sign. Settle where you are buying and what you are paying before choosing between plot, flat and commercial — those two decisions move your outcome more than this one does.

Bengaluru plot and apartment appreciation ranges by zone for 2021–2026, plot loan LTV and rate differentials, apartment carrying costs, and commercial versus residential yield ranges checked across published guidance in September 2026. Appreciation figures are historical and zone-specific, not forecasts. Yield ranges are market guidance and vary widely by asset. Lender appetite for plot and commercial lending to NRIs differs materially by institution. Net apartment yield is carried from our own gross-versus-net analysis. This is general market commentary and not investment advice.

Still deciding, or want this applied to your own situation?

Tell us where you are and we will come back to you. The first conversation is free, and we will tell you plainly if we are not the right people for it.

Choose the corridor and the price first.

Those two decisions move your outcome more than choosing between a plot, a flat and a shop ever will. The asset type is the last question, not the first.

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