Real estate investment was never highly preferred by investment advisor Sumit Agarwal but the Covid-19 pandemic changed everything. Relatively safe investment options like a bond, FD has a very poor return on investment in a situation where the interest rate has nosedived.
Most of his clients find it very difficult to accept the gut-wrenching volatility of the stock market or mutual funds and real estate investment is finding renewed favour with them.
After a detailed study of the real estate sector, Sumit now has the unshakable belief that real estate investment will be much favoured going forward. He has strong reasons for the belief which he would like to share for your benefit.
Real Estate Investment Offers Stability with Returns
Real estate investment does not suffer from volatility and traditionally in India real estate is seen as a stable investment with a good return over the years in comparison to other asset classes. Moreover, recent reforms such as RERA and GST have made real estate investment quite transparent and easy.
Real estate investment can provide a second of reliable passive income in the form of rentals which increases over time. In addition to it, there is generally a significant capital appreciation of real estate. In fact, it is almost impossible to lose money on real estate.
Real Estate is a Hedge against Inflation
Unlike several other asset classes, real estate price appreciates in tandem with inflation. This protects the investment and also provided a higher return on investment.
Real estate investment is generally medium to long term in nature. While it is very difficult to foresee the economic condition and return on investment of stocks or mutual funds after several years, real estate offers the security of investment and income growth.
Large Asset Purchase is Possible by Leveraging Fund
It is extremely useful to buy an asset with controlled leverage. Leverage in real estate allows one to borrow money from a lender to purchase property, instead of covering the entire expense. One benefits from returns, without putting much of their own capital into the property.
For example, one can borrow at a very low interest rate and get a high capital appreciation in addition to rental income. The difference is often quite substantial. Currently, PMAY CLSS Scheme makes it far more lucrative to buy a property.
Tax Benefits on Property Purchase
Another advantage of real estate investment is tax benefits. The Income Tax Act allows for exemptions for investing in a property, which results in the effective tax being significantly lower and also helps build an asset, simultaneously.
Even a second home investment can be quite lucrative and there are substantial tax benefits.
Low Home Loan Rates are Here for Some Time
Because of the overall drawdown of the economy, RBI is expected to keep the interest rate low for some time. Now the home loan rates are the lowest in a decade and therefore EMI burdens are quite low. This low interest regime will provide excellent opportunities to invest in real estate.
Work from Home is Here to Stay
In most families, children are attending online classes and office workers are working from home. This trend is expected to continue, even if partially, in spite of the pandemic related restrictions are lifted one day.
These online activities need additional spaces, privacy, and noise-free atmosphere. It is reported that this is a major consideration in 50% of property purchases these days.
Real estate investment will remain a preferred choice among other asset classes. Real estate prices have almost zero volatility and real estate investors enjoy a good night’s sleep.
The reasons why the property market is enjoying surging demand for budget homes will remain in the foreseeable future.
The bonanza of low interest rate, PMAY CLSS benefits, developers’ incentives, and other favourable factors come rarely together. The best time to buy a property is now and any decision to buy a property should not be postponed.
Very Nice Blog
Thank you for sharing this information.