Wealth for generations is created by investing in residential real estate

October 13, 2021 2:49 PM

Real estate is an asset which helps create hereditary wealth. For the smart investor, this should be the right choice.

Buying real estate has proved to be beneficial for everyone, be it end user or investor.

Shelter has always been a crucial necessity for human existence. The significance of owning a home has manifold advantages to the owner or an investor. Buying a house is not just a reflection of an economical but also a huge emotional and sentimental investment. It is a wealth generating asset in perpetuity to be cherished by generations.

Consequence of possessing a house has a dual objective i.e right to use or invest with stable rental income and capital appreciation in the long run. A great opportunity lies to invest in the property of branded developers with proven track record, offering attractive ROI as compared to other volatile asset classes.

Today, investors are advised to park their disposable income in home buying to rent it out for better income yields. To encourage this, the Model Tenancy Act was introduced by the Central government of India that will further formalize and bolster rental housing in India. It is a great window of opportunity for the investor community to step into the Indian housing market. India’s growth story reads very bullish, attracting investors bandwagon globally. Today, in a conducive market dynamic, it is the right opportunity to invest in a home, a segment pegged to grow at 10% CAGR.

The Covid pandemic has also brought in a new segment of home buyers i.e. the next gen millennials to fore. Simultaneously, the residential segment witnessed a spike in upgrade homebuyers, who aspired to opt for bigger luxurious apartments in the new normal. The skewed interest towards well planned development, embedded with best social fabric inclusive of branded education, healthcare, retail and recreational amenities, offers walk to work advantage with commercial spaces in proximity have garnered traction in order to uplift mental and physical wellness quotient. A well-balanced lifestyle, social distancing, safety, and hygiene are new parameters of home buying that are offered in a holistic development in suburban locations. This twin set of home buyers have resulted in creation of a new trend for investors: ‘buy to rent’.

Real estate as an investment has caught on in a big way, be it planning for future or retirement. The three major benefits – capital appreciation, monthly income (rental) and tax benefits on EMI payments – make homebuying a smart investment decision. This enables the investor to address certainty of future income, future job prospects, family responsibilities, economic migration and so forth. The aspect of wealth creation meets by pay-out (EMIs) being adjusted against steady rental income.

Age is no longer a barrier for home investment, it is the scope of job stability and growth curve that drives the decision. Property is a more secured asset and a great instrument to beat inflation, which makes it a value-add component of investment portfolio. Buying real estate has proved to be beneficial for everyone, be it end user or investor. Over the years, it has proved to be the largest asset class in the world, which ensures profitable returns over a period of time. As an asset, real estate holds a high utility value for the beholder.

Investment in residential real estate has a number of options for investors to choose from like studios, apartments, plots of land or bungalows across geographies. The growing infrastructure story will script the success of Mumbai and MMR property market in the future, making it a right time to invest now in festive tailwinds. An array of festive bonanza supplemented with low home loan interest, choice of inventory, innovative flexi payment schemes, deal sweeteners by the developers make it an ideal time.

Real estate is an asset which helps create hereditary wealth. For the smart investor, this should be the right choice.

(By Dr. Niranjan Hiranandani, National Vice Chairman – NAREDCO and MD, Hiranandani Group)

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