Why real estate is still the best investment in India?

From an investment perspective, real estate has traditionally been one of the safest long term investments not just from a growth standpoint but also to build a safety net for your family.

The revival and resurgence of the real estate industry post the pandemic has been one of the telling stories for the growth of the Indian economy. Correction in stamp duty rates, low interest rates and customers investing their pent up savings has resulted in a V-shaped recovery for the sector. This holds true not only for the domestic buyers but also for the NRI investors who have invested over USD 13 billion in India real estate last year. The months of May and June 2022 have recorded the highest number of property registration in the last 10 years, showcasing a solid foundation of growth for the sector.

From an investment perspective, real estate has traditionally been one of the safest long term investments not just from a growth standpoint but also to build a safety net for your family. While it is important to build a diverse portfolio with investments across equities, mutual funds, retirement plans, etc. one should close in on a real estate investment as early as possible to enjoy some long term gains. Real estate also does not require any special skill sets like for trading in the share market, making it relatively simpler as compared to other asset classes. 

What makes Real Estate the Best Investment 

Here are some top reasons why real estate is still considered to be one of the hottest investments in India:

Assured Rentals in Real Estate:

Be it residential or commercial real estate, getting assured rentals month-on-month is a great way to earn a handsome ROI on your property. With agreements ranging anywhere from 1 year to 5 years, it helps you escape from the volatility of the markets. The returns from rentals might not be substantial but they are recurring and confirmed which is always better.

Tax Benefits of Real Estate Investment

Real estate investments also bring along multiple tax benefits to the investors, especially if you purchase a house on a loan. Section 24 allows the investors to claim exemptions on the interest paid on the home loan. Additionally, Section 80C allows the investors to claim tax benefits on the repayment of the principal amount as well. Also, if you are a first-time homebuyer, you can save up to Rs. 1.5 lakh on the principal amount under Section 80 EEA, up to Rs.2 lakhs on the interest payable under Section 24. These tax savings can help you lower your spends and make the investment a lot more affordable. Lastly, one might also look at ‘Depreciation Expense’, which is one of the biggest tax benefits and can also help improve cash flows by reducing tax liabilities. 

Also one can get exemption on the capital gains too, if one decides to sell the property and invest in another one.  Section 54 of income tax act makes provision for this.

Low Interest Rates on Home Loans

The interest rates on Home Loans are a function of credit tenure. The longer the time taken for repayment, the higher the interest rate. While the RBI did increase the repo rates twice in the past few months, the current interest levels are still fairly low. This makes it the ideal time to invest in real estate as the interest level looks to increase in the next 12-24 months. Customers could score a massive bargain by taking advantage of the current interest rates.

Real Estate is a Buyer’s Market

There is no doubt that we are in an absolute buyers’ market currently. The last few years have not been ideal for the developers due to the pandemic which had seen a significant rise in surplus inventory. With the property prices having seen some correction, interest levels fairly low and the developers launching multiple offers, this is an ideal time to be a customer. Developers are going out of their way to ensure they clear off all of their current inventory so that they can focus on their new project launches.

Rapidly Growing Real Estate Sector

The Indian real estate market is growing at a fast pace. The market for real estate is expected to grow Rs. 65,000 crores in 2040 and would contribute almost 13% of the country’s GDP by 2025. Both large and small investors in India are once again realizing the benefits of investing in real estate, especially at a time when cautious investment remains part of the general lexicon. Additionally, a large chunk of the young workforce or millennials is now investing in real estate in Tier 2 & 3 cities for work-life balance, well-being, and future security. This trend would enable massive growth from other markets like Pune, Chennai, Hyderabad, etc. thereby elevating the growth prospects of the sector at a national level.

RERA Act’s positive impact on Real Estate

Post the introduction of Real Estate Regulatory Authority (RERA), the real estate sector received a much needed image transformation to become a much more transparent and customer friendly ecosystem. The regulatory body ensures customers receive all the possible information on the developers and their projects along with completion and delivery timelines as well. Easy availability of information on project approvals and customer-centric legislative processes have further given confidence to the market and buyers. Along with RERA, a strategic streamlining of approval processes has helped increase the confidence level of local and NRI investors which would further expedite the growth of the sector. 

Summing up Real Estate Investment in India

Real estate investment in India hence remains one of the hottest investments, due to its strong base and reliability factor. You can be assured that your property prices will always move in an upward direction in the long run. 

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