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Purpose This paper aims to study forced convection in a double tube heat exchanger using nanofluids with constant and variable thermophysical properties. Design/methodology/approach The cold fluid was distilled water flowing in the annulus and the hot fluid was aluminum oxide/water nanofluid which flows in the inner tube. Thermal conductivity and viscosity were taken as variable thermophysical properties, and the results were compared against runs with constant values. Finite volume method was used for solving the governing equations. For distilled water, Re = 500 was used, while for nanofluid, nanoparticles volume fraction equal to 2.5-10 per cent and Re = 100-1,500 were used. Findings Heat transfer rate can be enhanced by increasing the volume fraction of nanoparticles and Reynolds number. Thermal efficiency is better with constant thermophysical characteristics and the average Nusselt number is better for variable characteristics. Originality/value Heat exchanger efficiency is evaluated by using distilled water and nanofluid bulk temperature, thermal efficiency and average and local Nusselt numbers for both variable and constant thermophysical characteristics.