Is real estate in India still a profitable investment?

The real estate investment in the present time needs a different strategic approach than purchasing a property for personal use.

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If experts are to be believed, the smaller the market is, the lesser the risk is in real estate.

Once billionaire Andrew Carnegie rightly said, 90% of millionaires got their wealth by investing in real estate. And with time I have realized that it is true, only if you develop the catalyst mind to make the best of the opportunity. The sector calls for an eye for detailing that understands the highs and lows of the industry and can make the right choices.

If we look at the economy, it seems to be a tough year, but according to real estate experts, 2020 will see the most traction for the real estate sector and only the financially stronger players will stay ahead in the game. Amidst all this, the common man’s query is – Is it safe to step into real estate?

In the opinion of experts, the real estate investment in the present time needs a different strategic approach than purchasing a property for personal use. When you choose real estate as an investment strategy, you purchase property to make profit out of it. In most cases, the investor rents out the property or resells it at a higher cost. Keeping both the types of interests in mind, here is an analytical detail of the real estate market, which will help you clarify the doubts.

Scope for demand

With migration as the core idea behind job search in bigger cities, the real estate has boomed in the last 2 decades and is likely to grow in the coming years as well. People are ready to invest in small flats with dual purpose i.e., to live and to do investment. So, keeping that in mind, the demand is growing rapidly, and it is expected to rise till 2025. So yes, scope for demand makes it a profitable business with many players. The ratio of defaulters is high, which again makes it a smart move for genuine players to make a better scope in the market and attract customers with timely delivery of projects.

Learn the gap between owning and renting

There are two categories of buyers, one is those who are end-users of property and the other are those who invest to earn rent or resale the property to generate revenue and multiply money. Understand and analyze your purpose and then invest accordingly. If you are an end-user, look for properties built with amenities and for renting purpose, you might look for cheaper ones, in order to maximize profit in near future.

Invest in the right technology

It is important to understand that technology has taken every space, including real estate. You will be surprised to know that it has made activities like rent collection, communications between the landlord and the tenants easy to follow. In order to gain maximum benefits, you should invest in the right tech. For instance, you can use landlord software to help manage the property better. Also, technology saves time and costs and helps focus the resources on other aspects of the property.

Lesser risks in smaller markets

If experts are to be believed, the smaller the market is, the lesser the risk is in real estate. Due to smaller geographical area, bigger players don’t jump into the market and this gives a wider scope for the smart local players to play and generate revenue. Also, the ratio of price of purchase and rent is way different as compared to metropolitans, which further increases the scope for people to invest in smaller cities for the purpose of investment and renting.

Is it wise to invest in Real Estate in India in 2020-21?

According to real estate experts, it’s a big yes to invest in the real estate sector in the next two years and everyone is optimistic about the future of the real estate industry in the country and look forward to brighter days. It is believed that 2020 has great potential for both residential and commercial real estate business. In the last few years, co-ed office space has gained impressive traction in most cities with IT/ITeS players contributing to most of the demand. Experts suggest that to make it a smoother pathway for investors and developers, the government needs to take more quick and bold corrective measures for the housing and urban infrastructure sector, so that demand can be boosted to an unprecedented level.

Also, it is expected that whenever the government intervenes with corrective measures, the concept of co-living will see widespread acceptance in India. This trend is acting as a catalyst for an organized rental market in cities such as Bengaluru, NCR, and Pune in the same way as co-working spaces did for the commercial space. Also, in 2020, the Indian real estate system will exhibit more financial discipline, accountability, and transparency due to the structural economic policy reforms introduced last year.

Final words

In my opinion, if you are planning to add real estate in your investment portfolio, this is the right time to start visualizing and plan it for a better future. It’s the right time to nurture you liquid cash into the most potential investment via brands that are here to redefine the real estate and make it the most promising investment option in the near future.

(By Pankaj Kr Jain, Director, KW Group)

Disclaimer: This is the personal view of the author. 

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First published on: 13-07-2020 at 18:34 IST