Is it Wise to Invest in the Indian Real Estate Market in 2019 and 2020?
Since time immemorial, land has played an important role in shaping the course of history. Great wars were fought; kingdoms were created – all in the quest for land.
The reality here is that – land never loses value or demand, and with only limited space available for a fast-increasing population, realty offers better (and guaranteed) returns compared to other popular investment choices.
Here, in this blog, we share the outlook of realty investments in India for 2019 and help answer the crucial question of, “Should I invest in real estate in 2019 and 2020?”
What is Real Estate Investing?
Real estate investing needs a different strategic approach than purchasing a property for personal use. When you choose real estate as an investment strategy, you purchase a property to make a profit on it. In most cases, the investor rents out the property or resells it at a higher cost.
Just like all other investments – equities, bonds and more – you need to be aware of the ins and outs of the industry, market trends, to make smart choices that yield higher returns. If you are looking to invest in real estate this year or the next, here are some beneficial property trends to be aware of.
Current Property Trends that Favour Real-Estate Investors
The rise in Demand for Emerging Micro-Markets
The last year has been exciting for residential realty, as sales and demand picked up across the country. Housing sales rose by nearly 8% in the first three quarters of 2018 compared to the same period in 2017.
As expected property prices saw a huge rise in the top seven metros across the country – NCR (National Capital Region), Mumbai, Chennai, Bengaluru, Pune, Kolkata, and Hyderabad. But, what was more surprising was the rapid rise of property prices in emerging micro-markets due to infrastructure and economic developments.
For instance, Bhiwadi in NCR, Halol in Gujarat, Jamshedpur, Jaipur, Jodhpur, Sohna in Gurgaon, Airoli in Navi Mumbai, Pirangut in Pune and Madhapur in Hyderabad witnessed huge demand for residential homes. Real-estate experts predict that 2019 and 2020 will be the years of emerging micro-markets, with huge demand for quality residential homes as industry and economic opportunities grow in these micro-markets.
Impacts of the Real-Estate Reforms of 2017
Real estate is one of the major contributors to India’s GDP, and the market saw several progressive policy reforms in the last couple of years. While it’s true that most of these reforms were taken back in 2017, the impacts were seen largely in 2018.
The three major reforms – the introduction of GST, the launch of RERA and the grant of infrastructure status to affordable housing properties – have had a massive and positive impact on the industry. The government’s vision of “Housing for All by 2022,” and the grant of infrastructure status to compact, affordable residential homes saw an increase in the demand for low-cost homes.
The RERA (Real Estate Regulation Act) was introduced in 2016 to bring uniformity in the real-estate market and to protect the interests of buyers from the malpractices of unfair builders. Today, the results of the RERA can be seen – it has increased transparency in real-estate deals, improved accountability of builders, which in turn has led to increased demand from buyers.
The GST was introduced in 2017 with the ideology, “One Nation, One Tax.” While there were some initial teething troubles, today the impact of GST remains largely positive. GST has made it easy to do business in the country, seeing a marked increase in infrastructure developments and other real-estate projects.
These three factors have had a cumulative effect on the real-estate industry in India and drive the rise in demand for real-estate investments.
Increase in Real-Estate Sales and Launches
Post demonetization, real-estate project launches, and sales have grown significantly. One major shift in residential realty trends is the increase in demand for mid-segment and affordable housing, compared to luxury, high-end properties.
Other factors that drove real-estate sales in the last year include – availability of a wide range of flexible payment plans from NBFCs and digital lenders, which allows homebuyers to buy properties at lower EMI and interest rates, compared to traditional lenders; income tax rebates on home loans; CLSS; no floor rise cost; discounts and freebies offered by builders.
Innovations offered by Builders
The last few years have seen major innovations in the real-estate sector. With the introduction of various reforms, the real-estate industry saw the exit of less serious players, leaving the market to the professional builders.
Furthermore, builders have strived to innovate by offering homebuyers theme based projects like – comfort homes, senior homes, kid-centric homes, and more.
Buyers can choose from several themes to choose projects that are a perfect match for their lifestyles. Additionally, builders have incorporated technology and other amenities like smart lighting, 24 x 7 CCTV surveillance, power back-up, clubhouses, swimming pools, outdoor parks, and several other amenities to enhance the value proposition of their offerings.
The Rise and Demand for Integrated Townships
With property prices sky-rocketing at the cities and stagnant economic development opportunities, more and more Indians are looking at Tier-II emerging cities. These cities not only present an affordable alternative to the metros but also have the infrastructure and other factors working in their favour.
Due to the availability of huge land parcels at Tier-II emerging cities at affordable rates, developers can construct high-quality residential homes and townships at competitive prices, compared to cities.
How do these Trends affect the Real-estate Investor?
To put it in a nutshell, the residential market has seen a significant rise in demand and shows positive investor sentiment. Buyers and investors who were earlier undecided, are now actively looking for homes, as the overall real estate market in the country has seen an upward movement.
Developers have also undergone major transformations, and the leading and most trusted developers are looking to provide their valued clientele with added value and holistic living experience. Coming to the big question,
Is it Wise to Invest in Real Estate in India in 2019 and 2020?
A big YES! Considering the various beneficial real estate trends listed above, experts are optimistic about the future of the real estate industry in the country and look forward to brighter days. As mentioned in the beginning, land is a scarce resource, and fundamental supply and demand principles dictate that with higher demand and lesser supply, property prices are sure to go up.
So, if you are looking to add real estate to your investment portfolio, then now is the perfect time to get started.