Can Real Estate Investing Be A Profitable Bet?
There is a famous saying that everything is not always sunshine and rainbows. Similarly, not every investment option comes with a high-return and low-risk combination. Hence, finding the right product becomes a daunting task. In fact, risk and return go hand in hand. But there are options available where, if invested wisely, investors can get returns higher than what they would get from investing in any traditional investment instrument. One such investment can be in the real estate sector. The real estate sector in India is one of the favorite destinations of many people with good returns. In particular, real estate investing has long been viewed as a hedge against inflation.
After all, the ultimate goal for any investor is to maximize returns while at the same time minimizing risk. The first step that an investor chooses is to find the right investment that best suits the profile and needs. The real estate sector is a promising place which is considered as the safest option to deposit money. Apart from promising to build wealth, it secures the future by multiplying wealth. Investors get certain specific benefits when they buy assets. The sector is divided into four sub-sectors – housing, retail, hospitality and commercial. In India, the construction industry is one of the major sectors driving the economy. It is also the second largest job creator after agriculture. This nicely complements the growth in real estate as there has been a steady increase in demand for properties across the length and breadth of the country.
According to rating agency ICRA, the growth of the real estate sector will continue to increase with time. The market size is expected to reach $1 trillion by 2030. Deepak Khandelwal, Principal Partner, Square Yards, the country’s largest integrated platform for real estate and mortgage, said that the economic boom and incentives offered to customers make property buying a profitable investment. Due to its low-risk, high-return hardcore nature, the sector has faced all odds to instil confidence among investors instead of indulging in the cocktail of uncertainty presented by other investment instruments, he added.
“Over time real estate suffers less wealth erosion due to its tangible nature, even when market forces are at play, and can be passed on to generations to come, giving your offspring a bright and secure A real estate property owner can unlock opportunities to generate a steady and regular monthly rental income that will continue to grow over time with the capital value of the property,” he added.
Other factors that attract investors are low interest rates, reduction in stamp duty, stable property prices and attractive prepayment schemes. Data released by RBI-approved credit bureau CRIF High Mark, shows a rebound in the retail home loan market despite some vulnerabilities due to the pandemic. It added that the sector will continue to grow significantly as the remote working concept takes root. Notably, there has been a strong demand for high-value properties that can serve as catch-all compounds, live-work spaces and provide a resort-like living experience, attracting the attention of real estate developers. Huh.
Anand Sharma, Founder and Partner, Design Forum International, said that the sector has come a long way to become the preferred destination for investors, adding that real estate investment is now a prudent decision. A recent study conducted by the United Nations states that by 2030, about 600 million population of the country will live in urban areas. Thus, the demand for housing and other allied development will continue.
Sharma said, “The industry has seen increasing demand in the housing sector in recent years; due to record-low interest rates offered by developers, reduction in stamp duty and renewed interest among homebuyers for relatively large and comfortable homes. Sales have picked up.”
Also, another positive aspect of owning a home is that one gets an inner level of emotional satisfaction and happiness. Even investing in a small apartment or commercial property will yield a decent profit, either from rental income or through resale by booking a good profit margin after a certain period.
(Disclaimer: This article is for general information purposes only. Readers/investors are advised to seek expert advice before buying a property.)
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