Real estate investment can never go wrong? – People
Owning a house is not only the greatest joy in life, but also the greatest pursuit in life. People associate it with showing signs of general personal and social growth. Hence, due to the constant demand for better residential, commercial and hospitality space, real estate has always been one of the fastest growing sectors in the world.
However, in uncertain and tumultuous times like the recent COVID-19 pandemic, the real estate segment has seen significant ups and downs. During this economic upheaval in which people became unemployed, paying rent for houses became a financial burden. And so the need for home ownership became the driving force for the sector, making it the preferred investment option in this volatile market scenario.
The sector, once reserved for the elite, is now frequented by the urban masses and by people of simple backgrounds as access to credit, living standards improve and disposable income is good. Also during this pandemic, when the country went into a nationwide lockdown, home loan borrowers were better off using the EMI Moratorium Facility, reaffirming the fact that houses bought have an advantage over rental payouts.
The real estate sector in India has opened up significant investment opportunities over the past decade. If the numbers are to be believed, there is an estimated shortage of housing – nearly 25 million, which underscores the tremendous demand. Reasons – increasing urbanization, growing incomes and growing middle class households – all add to the demand in this sector. In fact, it is estimated that the sector will hit $ 650 billion over the next two decades, given the current level of $ 120 billion.
It is important to note that the real estate segment, which is seen as a stable asset class, tends to be a long-term and preferred investment option and therefore a cyclical downturn will not affect investments as much as the other investment areas.
Experts around the world swear by the mantra “buy cheap, sell high”. And as house prices fall, this becomes a smart investment option. The human element in this sector is also showing recent trends. The first thing people think who frequently migrate to metropolitan areas for better prospects and career opportunities is finding accommodation. Buyers are also looking out for price corrections that give them the option to upgrade to larger homes outside of their congested city centers. This sector has opened up significant investment opportunities over the past decade. If the numbers are to be believed, the market attracted around INR 43,780 billion ($ 6.26 billion) in investments in 2019, and the retail segment attracted $ 1 billion in private equity investments last year recorded. As of the end of the first quarter of 2020, institutional investment was $ 712 million.
It is not just these lucrative investment opportunities that are driving real estate growth, but also the home automation segment, which is considered the future of the real estate segment. This migratory population is looking for spacious and smart homes to make their lives easier and housekeeping stress-free, emphasizing the need for home automation.
The demand for real estate has always increased. According to Statista, an online portal for statistics from market and opinion research institutes, the growth rate of the real estate industry across India was estimated at 11.2 percent in the 2015-2020 financial year, and around 10 percent in the 2010 financial year -2015.
The portal claims that the growth can be seen not only in the residential sector, but also in the industrial and social infrastructure segment. Thanks to globalization, numerous international companies are opening their offices in India, creating jobs. “This means that workers have to be diverted, which leads to migration to the cities, which leads to an increasing demand for housing,” it said.
COVID 19 has also linked the feeling of space with the feeling of security. With increasing practice of the WFH (work from home) and school from home, the need for an additional room or a little more space increases.
Factors that affect the purchase
Site Due Diligence – Experts claim buyers are conscious about investing in property. They identify the place, explore the aspects of development – both current and future. If it’s an old place, its future will be in redevelopment. If it is a new place, the logistics will be different. These factors determine whether your property will be upgraded or devalued in the future.
Interest Rate Due Diligence – The buyer’s decision is also based on the liability investment, which must necessarily be based on the current interest rate rather than the future deal interest rates.
Developer Due Diligence – Buyers also make an informed investment decision based not only on location or property, but also on the developer’s track record and feedback from their existing or legacy clientele on the developer’s technical and fundamental business fundamentals.
The growth projections and market trends suggest that the future of the real estate sector not only looks promising, but will also benefit from the technological innovation in its space, especially in unpredictable times. It can rightly be summed up: intelligent real estate, home automation and a touch of human emotions together determine the future of the real estate sector.