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Real estate investment opportunities: a comprehensive guide to investment
Real estate is the backbone of every economy. Allowing 100% FDI in this sector opens doors to investors and customers alike. However, there are a variety of options available to investors seeking property investment opportunities. This blog post will explore the possibilities of real investment and how it can benefit you. This blog post will also highlight the reasons why and how such an investment can be made.
Why real estate?
Gone are those days when property investment was viewed as owning a property only. In fact, years of research show that investment in property not only pays a greater return and is safer but also offers multiple investment benefits that most investments fail to address. If we go by the potential return barring gold investment, real estate investment is the only option that offers a great return. Moreover, property investments are less affected by market fluctuations in comparison to other investments. The below-mentioned chart clearly explains the scenario.
*Depending upon property and investment.
Furthermore, according to RBI data for 2022, Indian banks advanced around 2 trillion rupees (USD 24.44 billion) in housing loans, almost reaching pre-covid levels. Investment Oppurtunities:- As an investor, there are various property options available to you. However, with a clear investment goal, you can park your investment in such a way that it cannot only provide you with great returns but also appreciate in value. To make it more clear, we can categorise different property options into three major sections: residential, commercial, and theme-based commercial property, on the basis of recurring returns.
However, property appreciation is another thing that we add to the list. Since a property option is subject to liquidation, sale, or transfer of ownership, it therefore requires a separate yard to measure. The below-mentioned chart clearly shows the property appreciation trend in different Indian states.
According to the India Brand Equity Foundation (IBEF), India is among the top 10 price-appreciating housing markets globally. During 2000–2022, the FDI infusion in this sector (including construction and development) stood at USD 55.18 billion. Similarly, according to Savills India, the sale of luxury homes in India rose by 130% in the first half of 2023. Moreover, fractional ownership annual yield is around 8–10%, and the property appreciation of a commercial property demonstrates 5–10% growth each year. Similarly, the rental yield of commercial property is recorded at approximately 9% p.a.
The prospect: Most investment options are purely driven by demand and supply and subject to open market dynamics. Since demand and supply of financial instruments are regulated by the government but controlled and managed by various intermediaries, the price control mechanism does not stay in one hand and is subject to market ups and downs. Property investment is the only option, which has very limited supply but great demand. In addition to that, various government initiatives fuel infrastructure development to speed up economic growth. The availability of precious metals, mining, and contolling is beyond the control of private investors. Similarly, inflation and other factors pose various challenges responsible for the price fluctuation of different investments.
A survey conducted by “Centrum Wealth” reveals that Indian fund managers expect that the Indian government will continue fueling the capex cycle in the coming years. Moreover, private capex is also expected to revive. It should be noted that urban and rural consumption will aggravate this phenomenon, while service exports are expected to be muted. The Indian real estate market is estimated to be worth USD 0.33 trillion in 2024, which is expected to touch 1.09 trillion by 2029.
During the years 2024–29, the growth of CAGR is expected to be 25.60%. similarly high demand for affordable housing, leading the Indian real estate housing market. The urban housing area is estimated to fall short of 10 million housing units. And an additional 25 million units of affordable housing would be required by 2030, according to IBEF. Demand for data centres is also expected to increase by 15–18 million square feet by 2025.
Conclusion: Real estate investment opportunities open the doors of possibilities to augment the return with different investment avenues. However, investments in commercial property have more precedence than others. Great cash flow, great income potential with longer leases, and a lower vacancy rate make it more lucrative. HPI at market price under construction and ready-to-move property also shows an annual increase of 8.5%, whereas average price appreciation in a year is recorded at 3.5% across the top 50 cities in India. Besides, national housing property prices in India have shown an incremental growth of 10%. In light of the above arguments and facts, we can say that real estate investment has much potential and the opportunity to provide a great return and property appreciation to investors.
