For Rehan Arora, a Bengaluru-based software engineer, landing a plum MNC job was a dream. It helped uplift his lifestyle, and he started looking for suitable investment options. Some of his peers were eyeing newer investment avenues like cryptocurrency, while others chose the stock market. Rehan was keener on real estate as he saw his cousin Vivaan buying a plush apartment in Navi, Mumbai, earlier and earning a handsome amount through rent.
After exploring the recent real estate investment news and developments, Rehan became more assured of his investment choice. Real estate continues to be the preferred source of investment in India despite new-age investment choices like mutual funds and bonds gaining traction with investors.
Why does Real Estate Continue to be a Worthy Investment Option?
In India, real estate has emerged as a robust asset class over the years, consistently outshining many other investment options. The resilience of this sector, coupled with the latest government policies (like PMAY) and infrastructure growth, has made it a viable choice for investors from diverse income and age groups.
Real estate investment requires less technical acumen and research than popular new-era investments like bonds and stocks. Anyone can invest in this sector after a certain age with the necessary monetary assets.
The risk factors in the real estate sector are fewer compared to other alternatives. For example, inflation and other factors affect the value of mutual funds and FDs. On the contrary, at least in India, property prices keep rising with time. It is deemed a safer and solid investment choice, paving the way to creating generational wealth.
What has boosted investors’ confidence is the deployment of RERA. This has helped the government resolve previous complaints about transparency and shady practices in the real estate sector. The emergence of Real Estate Investment Trusts will likely attract young and new-age investors like Rehan.
Real Estate Investment Trends across Various Sectors in India
The Wealthy Elite
The wealthy elite in India are more eyeing the residential real estate sector than ever, say analysts. A major media report states that over 30% of ultra-high-net-worth individuals choose real estate for wealth allocation. Approximately 12% of them are planning to buy new properties. The trend is also fueled by strong economic confidence and a focus on lavish and sustainable living.
The luxury real estate market in top metro cities is experiencing major growth due to growing income levels, favourable lending rates, and unprecedented infrastructure expansion. Along with financial gains, affluent investors deem real estate a status symbol and ideal means for long-term investment. Some of them also invest in the commercial real estate segment.
The Millennials
The real estate sector is a significant investment channel for millennials, comprising approximately 34 percent of the country’s population. They are steadily shifting from renting to owning properties across the country, driven by greater financial stability, overall infrastructural growth and rising incomes.
Millennials are keen on buying properties with sustainable development models and seek energy-efficient appliances. Some opt for multi-unit properties with co-living spaces based on fractional ownership models. Shared ownership enables them to access high-value assets without making hefty investments at one time. It also opens a gate for passive income and investment diversification.
They rely heavily on digital technologies for nearly everything and prefer buying properties equipped with smart technologies. They rely heavily on digital technologies (VR tours, online reviews, 3D walk-throughs, etc) for property exploration and assessment needs.
What Does the Future of the Real Estate Sector in India Look Like?
The Indian real estate sector is on a roll. The economic stability and infrastructure growth in major metros and suburbs have sparked optimism among consumers and developers. Besides, the diversity of buyers buoyed by the resurgence of millennials has widened the scope of investment here.
Listed here are the emerging trends shaping the future of the Indian real estate sector:
- Rapid urbanisation – The land saturation in major metros drives real estate development in the nearby suburbs. The newest government initiatives on smart cities, infrastructure development, and affordable housing will further fuel this trend. The tier 2 and 3 cities will emerge as thriving housing markets.
- Co-living and co-working spaces – Millennials are increasingly eyeing shared living and workspaces, owing to their flexibility.
- Commercial real estate – Significant growth in sectors like IT, finance, and retail is driving a boom in commercial real estate in India. The rise of the urban population and growing disposable income levels are also fueling the growth of retail and entertainment spaces.
- Sustainability-centric projects – With more investors seeking sustainable properties, the demand for energy-efficient designs and sustainable projects is growing.
Wrap Up
The Indian real estate sector, fueled by favourable govt. policies, shifting investor preferences, and heightened spending capacity are on a growth trajectory. These factors are deemed powerful enough to override a few existing hurdles like market volatilities, land acquisition issues, and prevalent regulatory hurdles.
