Being the epitome of economic development, infrastructure plays a pivotal role in boosting overall growth in nearly all sectors of the economy. Real estate is a large sector and is primarily affected by infrastructural changes. As far as infrastructural growth is concerned, facilitating the environment created by the government’s macroeconomic policies creates an enthusiastic environment in the real estate sector too. Given the fact that India is a developing economy with a large population with rising demand and growing investment culture, the ongoing scenario demands timely investment in the real estate sector.
Physical infrastructure particularly involves the creation of capital assets such as roads, townships and buildings, to name a few. Asset creation on such a large scale explicitly implies far-reaching opportunities in Residential, Commercial and Industrial Real Estate businesses. To stimulate the economy, the government aims to increase expenditure on infrastructure, which means more capital formation, leading to a win-win situation for everyone involved.
What Does it Mean to be a Market Driver?
The real estate sector is mainly driven by factors viz. Economy, Government Policies and Demographics. Now, the fundamental thing to understand is that all these factors usually share a directly proportional relationship. If the investment environment is lucrative, it simply means that these factors invariably exist to ensure that there remains a facilitating setup for investment.
Why is Real Estate the Best Option for Investment?
Real estate is one of the evergreen investment options. It categorically becomes a lucrative investment option due to a suitable economic setup characterised by reliability and profitability. Let’s see why it is the best time to invest in Real Estate.
Profitability
Real Estate is one of the most profitable investment options that exist in the Indian Financial Market. Increasing capital asset prices assure investors of notably higher Returns on Investment (ROI). Currently, in India, a significantly higher score (greater than one) on Profitability Index (PI) indicates that it is high time to invest in the Real Estate sector.
Reliability
Believe it or not, Real Estate is one of the safest and most reliable investment options since it is largely devoid of market risks, uncertainty and unpredictability. Market situations are driven by a pro-infrastructure outlook favouring a strong Real Estate market.
Affordability
With the advent of newer market strategies and investment methods, investment in real estate is not tricky and complicated anymore, thanks to the emergence of Real Estate Investment Trusts (REITs) and Real Estate Investment Groups (REIGs). It has become easily affordable for every Indian common person out there.
Provides Leverage
Leverage basically involves the maximisation of the returns on investment. Real estate provides greater financial leverage in comparison to other investment options. For instance, when you pay a 30% down payment to get 100% of real estate property. The 70% becomes the leverage.
Asset for the Future
State-of-the-art technology is the unique feature of today’s era. Real Estate products are not untouched by this modern-age revolution. Investment of today will unquestionably yield tangible and intangible benefits tomorrow. Needless to say, it is an asset for the future.
Permanence
It is said that Real Estate investment is an investment for generations. Inconceivably high durability makes it an attractive investment alternative. Return on such investment is usually a longer duration regardless of market extremities.
Diversification of Assets
Due to its low correlations with other assets, including Gold, Real Estate investment provides asset diversification. It may surprise you, but there have been cases when the stock market is doing badly, but real estate, on the other hand, performs well.
Greater Inflation Hedge
Inflation hedging is a term that denotes the practice or method used to offset the anticipated drop in a currency’s price. Since Real Estate provides for diversification of assets, it leads to a greater Inflation Hedge.
Best Ways to Invest in Real Estate
Real Estate Investment Trust (REITs)
A Real Estate Investment Trust (REITs) is basically a company that, inter alia, owns, operates and finances income-generating real estate. Publicly traded like dividend-paying stocks, REITs are highly liquid and provide greater diversification, remarkably higher Return on Investment (ROI) and a lesser overall risk environment.
Real Estate Mutual Funds
Professionally managed pooled investment, Real Estate Mutual Funds invest in a variety of vehicles such as bonds and stocks. The advantage is that it provides an opportunity for small-scale investors with diversified exposure.
Real Estate Investment Groups (REIGs)
Real Estate Investment Groups (REIGs) work almost similar to Real Estate Mutual Funds. Typical Real Estate Investment Group (REIG) involves purchasing (by a company) a group of apartment blocks or condos and then allowing investors to purchase them through the company, thereby joining the group.
Real Estate Crowdfunding/Property Crowdfunding
In layman’s terms, crowdfunding involves collecting a modest amount of capital from many small-scale newbie investors to finance a new business venture. Crowd Funding’s internet site usually raises the amount. A striking feature of this kind of peer-to-peer investment is that it serves as a secure and affordable option.
Real Estate Syndication
A big real estate property can be jointly purchased by pooling money by a group of investors willing to seek large-scale investment.
Are you a Beginner?
Beginners are always suggested to invest in risk-free and cost-effective Real Estate options.
House Flipping
Also termed Wholesale Real Estate Investing, House Flipping has emerged as a popular investment option in India for investors. It usually involves buying a distressed property, refurbishing it and selling it at a reasonably profitable price.
Rehabbing
A similar method allows positioning a property for resale by making minor changes.
Rental Properties
Well, Rental properties can provide a high rate of return (ROI), diversify investment portfolios, and secure against downturns and other unforeseen economic disasters.
Online Real Estate platforms
Online Real Estate platforms assist investors in connecting with real estate developers of their choice. The investors then decide to finance real estate projects in return for repayments.
Now is the Best Time!
Hence, it is quite clear that it is probably a good time to seek investment prospects in the real estate sector. Gone are the days when investment was only a game of few. Today, we live in an economic environment where the market has something for everyone. Secure your earnings; invest now.
