Mon. Oct 2nd, 2023
    The Benefits of Investing in Residential Real Estate in India

    The Indian economy is currently experiencing robust growth with high investments across various industries. One sector that has seen a significant increase in demand is residential real estate. The recovery in property prices and rising yields have made investment in residential properties attractive once again.

    According to a recent report, sales in India’s top seven cities increased by 36% in the second quarter compared to the previous year. This sustained demand can be attributed to the long-term benefits of owning a home. Factors such as increased earning potential, the desire for a better standard of living, and the growing base of aspirational consumers have fueled the demand for residential properties.

    Additionally, the premium housing segment is also expected to witness higher demand in the future as economic growth continues. This makes real estate a desirable asset class for investors.

    One of the main reasons for the increased interest in residential real estate is the emphasis on security and safety. The COVID-19 pandemic highlighted the need for a secure asset that can navigate uncertainties. People realized that owning a home not only provides a stable investment but also serves as a safe option during challenging times.

    Real estate has always been considered a stable and reliable investment option, even in times of economic downturns. Rental properties, in particular, have proven to be a profitable asset class for investors. Unlike other asset classes, real estate offers greater security and stability, making it an attractive long-term investment.

    The Indian real estate market is rapidly growing and is expected to contribute almost 13% of the country’s GDP by 2025. Both large and small investors are recognizing the benefits of investing in real estate, especially in an atmosphere of cautious investment. Additionally, a significant portion of the young workforce is investing in real estate for overall well-being and future security.

    Diversification is another advantage of real estate investments. Unlike traditional asset classes, real estate offers the opportunity to create a diversified portfolio with assets in various forms such as residential, industrial, and commercial properties. This diversification can help lower portfolio volatility while ensuring a higher return per unit of risk.

    Real estate investments also come with tax benefits. Homebuyers can save up to INR 1.5 lakh on the principal amount and up to 2 lakhs on the payable interest through tax deductions. These tax benefits help reduce taxable income and provide additional incentives for investing in real estate.

    For NRIs, investing in real estate in India has become particularly attractive in the post-pandemic era. The uncertainty of global policies has led NRIs to seek guaranteed assets like real estate that provide a sense of permanency and stability.

    In conclusion, the Indian real estate market is dynamic and fast-growing, making it one of the most desired investments. With its stability, diversification potential, tax benefits, and long-term growth prospects, investing in residential real estate in India can lead to favorable returns. As long as the macro fundamentals remain stable, the demand for real estate will continue to grow, providing ample opportunities for investors.

    Source: Ramani Sastri, Chairman and MD of Sterling Developers