Real Estate Investment: the right time, the right place – the higher appreciation

Mumbai, September  19, 2023: ‘Top Investment Corridors in India’ – a latest report published by Colliers’ Advisory Services highlights how there’s never been a better time to leverage the full benefits of real estate investments in India. The report which put forth India’s strong position as a favored destination for international investments across various assets in the real estate sector, highlights factors such as combination of enhanced housing affordability, pandemic-era savings, health and wellness hygiene, favorable investment policies as key drivers that are triggering the housing demand across the country.

Delving deep, the report suggests that since the real estate sector continues to get traction, coupled with acceleration in infrastructure developments, micro-markets in India across major metropolitan cities are evolving as key investment corridors.

When it comes to the key benefits that are influencing the investment sentiment, the report suggests that with well-chosen assets, investors can enjoy predictable cash flow, excellent returns, tax advantages, and diversification—and it’s possible to leverage Real Estate to build wealth. Real Estate investors generate income through rental income, appreciation, and profits generated by business activities that depend on the property. Another factor is the high appreciation of land which is a lucrative proposition for investors to get better yields and returns, especially at a time when the rate of appreciation is much higher than it was few years ago.

Wealth creation and the opportunity to diversify are other reasons that are garnering interest from investors as by investing in land, there is a huge range of potential for monetization. The investor could just hold the land for long term, build a structure on it to lease out, have a holiday property and can earn pay-outs from there too.

Infrastructure development to boost real estate markets across top metropolitan cities

Though real estate as a sector depends on various internal and external factors, the development of Infrastructure and civic amenities help in the development of the city and impacts the real estate sector adversely. Infrastructure projects are socio-economic climates that serve as a conduit of investments and developments in real estate. Several factors such as employment, regional connectivity, accessibility to healthcare and educational facilities, safety and security, environmental sustainability, good governance, and socio-political stability are key growth drivers for investments.

“The micro-markets close to financial and industrial hubs in major cities of India are anticipated to gain more attraction in the upcoming years and holding real estate in these micro-markets is the key to securing and enhancing wealth for the smart investors. In fact, it is observed that the demand for Villas, farmhouses, plots, and land across key destination close to nature and proximity to metro cities have increased 2X post Covid-19,” said Umakanth Y, Senior Director & Head of Delivery, Advisory Services, Colliers India.

Emerging Investment opportunity at key tourism destinations

Investing in land and monetizing it in rental format gives 10 times higher yield than ready apartments. There has been a spike in demand for investing in land at a nature friendly location and across key tourism destinations. The concept of investment in serene locations has gained significant traction during the lockdowns and travel restrictions during the pandemic and is now on an upward trajectory.

Destinations close to metropolitan cities on investor radar

Maharashtra-Neral-Matheran: The financial capital, economic powerhouse, and industrial hub of India. The business hub, with an established media & entertainment industry. Mumbai is one of the most vibrant and dynamic real estate market in the country due to high property prices, limited land availability, and a growing population, which creates significant demand for real estate. The locations such as Vasai Virar, Bhiwandi, Neral-Matheran, are the key hotspots, led by availability of non-agricultural large land parcels along key upcoming infrastructure developments and presence of branded developers.

Weightage as per the triggers that impact appreciation of the market

The Neral-Matheran corridor has emerged as a major hotspot amongst investors due to the presence of branded developers with sizeable real estate projects, proximity to the city centre, and well-established social amenities like Bhimashankar Wildlife Sanctuary, ND Film Studio, Neral-Matheran toy train, Rambag point. The Neral-Matheran micro-market is considered as one of the

key investment regions with an average annual rental yield of 15% for holiday homes and is expected to achieve 5X return on land investments in the next 10 years.

The tourism and industrial hub of Gujarat – Sanand Nal Sarovar corridor, ECR in Chennai, Medchal in Hyderabad, New Town and Rajarhat in Kolkata are also attracting investments. These corridors with ample amount of land availability, increased traction in tourism and uptake in infrastructure are emerging as destination investments with an average annual rental yield between 2.5% – 4.0% and price appreciation for land between 6 – 8% annually.

The real estate investment market for land is still at nascent stage of development in few corridors, while corridors closer to tourism destinations and metro cities have grown multiple times with the impact of pandemic and increased real estate investments. Therefore, the growth rate of second homes or weekend homes in India is expected to grow multiple folds led by wide infrastructure projects planned and under construction across the states.

“Better infrastructure, affordability, Higher rental yield, scope of capital appreciation, tourist attractions, proximity to city center are the key parameters while looking for any investments. These factors, together with the rising popularity of remote work and flexible work options, have contributed to make tourism destinations in India more attractive to investors. Overall, Neral-Matheran in Maharashtra and Sanand Nal Sarovar in Gujarat are attractive to real estate investors seeking higher returns due to their lower capital investment as well as the potential for price growth and higher rental yields. However, the investors should also do their due diligence and carefully evaluate the risks and opportunities before investing in any specific region.” said Swapnil Anil, Executive Director & Head of Advisory services, Colliers India.

Corporate Comm India (CCI Newswire)