In 2022, the luxury segment was the real estate growth driver, and this trend is expected to continue in 2023. Larger, higher-end properties will be in higher demand. Real estate will be an appealing investment opportunity in FY23 for investors with a long time horizon, says Atul Goel, MD, Goel Ganga Group, & Author of Real Rich.
In an exclusive interview with Sanjeev Sinha, Mr Goel talks about the latest trends in the realty market and shares his views on how the continuous rate hikes by the RBI will impact real estate demand in FY23. Excerpts:
How has the real estate market reacted to post-Covid recovery? What are the current trends in the industry and how do you predict its trajectory in financial year 2023?
The world faced unusual, disruptive changes due to Covid-19, creating obstacles and economic possibilities. However, the economy and job market have revived post-Covid. We are potentially in the middle of an upward cycle for the sector. Due to the involvement of so many litigations regarding land, buyers are showing interest in investing wisely in branded ventures. In 2022, the luxury segment was the real estate growth driver, and this trend is expected to continue in 2023. Larger, higher-end properties will be in higher demand. The growing popularity of WFH and hybrid working models is fueling demand in this segment. Real estate will be an appealing investment opportunity in FY23 for investors with a long time horizon and no need for immediate returns.
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As against opting for ready-to-move-in homes earlier, homebuyers are now seen investing mostly in under-construction projects. What do you think about this trend?
Under-construction homes are becoming popular among consumers since homebuyers get many more home options than completed projects. They can easily choose their houses from many options, while in ready-to-move-in properties, the options are less. Since you are paying a much lower price for your house, the appreciation is likely higher. Investing in an under-construction property can fetch excellent returns in the long term for both investors and homebuyers. As the construction progresses, the price of your property also increases. Because under-construction projects take time to complete, an investor can reserve a property for 5-10% of the actual cost. The balance can be paid in instalments or through the developer’s deferred payment plan. In this way, the input cost is a fraction of what it would have been if a ready-to-move-in housing unit had been purchased.
Why is real estate a better investment option than other forms of investment for consumers? What makes it a more attractive and lucrative proposition?
Real estate is a typical long-term investment that steadily allows for wealth creation through rental returns and capital appreciation. When you invest in real estate properties you can gain from many tax benefits and increase your returns. While stocks, bonds, certificates of deposit, and other forms of investment are all viable options in their own right, real estate provides something that none of the others can: cash flow that is directly related to your own decisions. In other words, your actions determine your net income. Other types of investments frequently rely on decisions made by company officers. Real estate investors manage their own assets.
Amongst residential, commercial and under-construction properties, which is the most opted for by the customers? What are the current trends?
Under-construction projects are gaining more traction from customers since after buying an under-construction property at a lower rate, the appreciation is expected to be higher. As construction progresses, the price of your property also increases. Moreover, during this period, the development in the surrounding infrastructure also adds to the value of a property. Which is why, buying a property in its nascent stage is a wise decision.
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Does your recent book Real Rich provide readers the information they need to make informed real estate decisions?
Real Rich is a quick, compelling book that can change the way people understand, engage with, and benefit from real estate. This book is for everyone interested in building true, long-term, sustainable wealth for themselves and their families. It encompasses decades of real estate expertise, and learnings from allied fields of history, psychology and economics. It tells real life stories from regular people who have made real estate work for them. The book has attempted to demystify real estate. It busts myths, reveals secrets, builds transparent conversations, admits shortcomings, points out possibilities and enables readers to make informed decisions for abundant futures.
What is your POV on the RBI’s repo rate hike and how will it affect real estate demand in FY23?
The continuous rate hikes may lead to short-term turbulence in the overall housing demand with the repo rate now near 4.5-year high. However, there is a positive sentiment, as affordability and disposable incomes of new-age homebuyers are much better than in the past. This will probably give the rental market more traction. Renting will become significantly more affordable due to increasing home-buying costs and interest rates. The positive sentiment will continue in the luxury segment driven by changes in buying patterns post the pandemic.
