Is real estate investment in India a Profitable Investment?


By Mr. Pratik K. Kataria, Director, Sainath Developers

Investment is defined as,‘’an assetor item acquired with the goal of generating income or appreciation in the future”, but the definition or the actual meaning of the term ‘asset’ is subjective and changes when we consider another constant variable which is ‘TIME’.

A decade ago, the options of Assets to Invest in were a handful or maybe the other options were unexplored, but with the evolution of internet and the big data being available at the click of a button, the exposure of investments in different asset classes has evolved. Suggestions of assets to invest in used to come from family and friends but now we have ‘Influencers’ who have taken this baton and evidently have made this evolution, smooth and effortless.

Some Assets garner interest amongst new age investors because of the FOMO (Fear of Missing Out) around them, whereas others are backed by the sheer age-old fundamentals that have driven veteran investors to still invest in such asset classes and real estate falls under the latter. At the annual Berkshire Hathaway shareholders meeting, Mr. Warren Buffet said , “if all the attendees in the room owned “all the farmland in the United States” or “all the apartments in the country” and they offered him a 1% stake for $25 billion, he would write them a check on the spot, as the apartments are going to produce rent and the farms are going to produce food”.

The post pandemic revival journey of the real estate sector in India has been quite startling, when most other sectors were struggling to return to normalcy, real estate bounced back at a rapid pace. Even though the consequent lockdowns dampened businesses, the rebound was quick. Market trends also suggest that since the third quarter of 2021, positive sentiments have been reported in terms of buyers’ involvement across different asset classes of Real Estate. Additionally, the massive support by the Central as well as the State government has helped the sector gain the confidence in the minds of the Real Estate Investor.

Another factor which has channelized the focus of investors into investing in real estate is the Affordability Index, which is the ratio of EMI (Equated Monthly Installments) to Total Income.This ratio has improved since the last decade until now, which means, Real Estate is more affordable than before and Home-buying has become more frequent especially post the pandemic and introduction of hybrid work modules, where in most salaried individuals are venturing into investing in real estate investments actively or passively.

The BSE Realty index has grown 127% since the pandemic, which has also boosted the confidence of the investor who invest in shares of real estate companies, this is an indicator of how lucrative this form of investment is to the masses now.

When we look at the pyramid structure of investors, the base of the pyramid consists of maximum investors who have smaller ticket sizes to invest in but form a considerable bigger chunk of the pie who invest in different asset classes. The exposure of these group of investors to investing in the real estate earlier was subdued as Real Estate required deep pockets to invest in, whereas now, thanks to the mediums of investing like fractional ownership; investors can invest as little as Rs. Five Lakhs in Real Estate and allied asset classes. REITs (Real Estate Investment Trust) is another instrument that is in the limelight, which helps a retail investor invest in commercial real estate. The REIT market widens the horizon of the small and medium scaled investors, as the returns are from stable rent yielding commercial real estate assets, However, investing in real estate should be a well-planned and well-informed decision especially for first-time investors, majorly because the market offers a varied range of options for financial investment along with an array of projects to choose from.

To sum it up the Indian real estate market is flourishing and by making an informed choice one can ride this wave and get higher gains in return.

Corporate Comm India (CCI Newswire)