Real estate property has traditionally been a method for considerable investment by itself and investment opportunity for High Net-worth People, Financial institutions as well as individuals taking a look at viable alternatives for investing money among stocks, bullion, property and other avenues.

Money put in in property because of its income and capital growth provides stable and predictable income returns, similar to regarding bonds offering both a normal return on investment, if property is rented as well as opportunity of capital appreciation. Like all other investment options, real estate investment also has certain risks attached to it, which is quite unlike other investments. The available investment opportunities can broadly be categorized into residential, commercial office space and retail sectors. 

Purchase scenario in real house

Any investor before considering real estate investments should consider the risk relating to it. This investment option demands a high access price, is experiencing lack of liquidity and an unsure gestation period. To being illiquid, one cannot sell some units of his property (as you could have done by selling some units of equities, debt or even mutual funds) in the case of urgent need of funds.

The maturity period of property investment is uncertain. Investor also has to check the clear property title, especially for the investments in India. The skillfully developed in this regard claim that property investment should be done by folks who may have deeper pockets and longer-term view of their opportunities. From a long-term financial returns perspective, it is a good idea to invest in higher-grade commercial properties.

The returns from property market are comparable to those of certain equities and index funds in longer term. Any investor looking for balancing his portfolio can now go through the real real estate sector as a secure means of investment with a certain level of unpredictability and risk. The right renter, location, segmental types of the Indian property market and individual risk preferences will hence forth be key indicators in reaching the target yields from purchases.

The proposed introduction of REMF (Real Estate Shared Funds) and REIT (Real Estate Investment Trust) will boost these real real estate investments from the small investors’ point of view. This will also allow small investors to get into real estate market with contribution as little as INR 10, 000.

There’s also a demand and need from different market players of the property segment to slowly but surely relax certain best practice rules for FDI in this sector. These foreign opportunities would then mean higher standards of quality system and therefore would change the complete market scenario in conditions of competition and professionalism and reliability of market players.

Total, real estate is expected to give a good investment alternative to stocks and bonds over the approaching years. This attractiveness of real estate investment would be further increased on account of favourable pumpiing and low interest rate regime.

Looking forward, it is possible that with the progress towards the possible opening up of the real estate shared funds industry and the participation of financial organizations into property investment business, it will eventually pave the way for more organized investment real estate in India, which would be an apt way for traders to get an option to buy property portfolios at marginal level.

Investor’s Profile

Both the most energetic investor segments are Large Net Worth Individuals (HNIs) and Financial Institutions. Although the institutions traditionally show a preference to commercial investment, the high net worth individuals show desire for investing in residential as well as commercial properties.

Aside from these, is the third group of Non-Resident Indians (NRIs). We have a clear prejudice towards purchasing residential properties than commercial properties by the NRIs, the simple fact could be reasoned as psychological attachment and future security sought by the NRIs. As the necessary thank you’s and documentation for purchasing immovable properties other than agricultural and plantation properties are quite guaranteed the rental income is openly repatriable outside India, NRIs have increased their job as investors in real estate

Foreign direct assets (FDIs) in real property form a tiny portion of the whole investments as there are restrictions like a minimal lock in period of 3 years, a minimum size of property to be developed and conditional leave. Besides the conditions, the other investor will have to deal with a number of government departments and interpret many sophisticated laws/bylaws.

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