Wealth for generations is created by investing in residential real estate
Shelter has always been a critical necessity for human existence. The importance of owning a home has many benefits for the homeowner or an investor. Buying a house is not only a reflection of an economic investment but also a huge emotional and sentimental investment. It is an asset that generates wealth in perpetuity to be cherished by generations.
The consequence of owning a house has a dual purpose, namely the right to use or invest with stable rental income and long-term capital appreciation. A great opportunity is to invest in the property of proven brand developers, offering an attractive return on investment compared to other volatile asset classes.
Today, investors are advised to park their disposable income in the purchase of housing for rent in order to obtain better returns. To encourage this, the Model Rental Law has been introduced by the Central Indian Government, which will formalize and further strengthen rental housing in India. It is a great window of opportunity for the investment community to enter the Indian housing market. India’s growth story is very optimistic, attracting the investor train to the world. Today, in a favorable market dynamic, this is the right opportunity to invest in a house, a segment that should grow at 10% CAGR.
The Covid pandemic has also brought in a new segment of home buyers, namely next generation millennials. Simultaneously, the residential segment saw an increase in the number of buyers of upgraded homes, who aspired to opt for larger luxury apartments in the new standard. The distorted interest in well-planned development, integrated with the best social fabric including brand education, healthcare, retail and leisure facilities, provides a walk-to-work advantage with shopping spaces nearby have attracted attention in order to increase the quotient of mental and physical well-being. A well-balanced lifestyle, social distancing, safety and hygiene are new home buying parameters that are offered in a holistic development in suburban areas. This dual set of home buyers has created a new trend for investors: âbuy for rentâ.
Real estate as an investment has grown tremendously, whether it’s planning for the future or retirement. The three main advantages – capital appreciation, monthly income (rent), and tax benefits on EMI payments – make buying a home a wise investment decision. This allows the investor to address the certainty of future income, future employment prospects, family responsibilities, economic migration, etc. The wealth creation aspect is met by adjusting payments (EMI) based on stable rental income.
Age is no longer a barrier to real estate investment, it is the extent of job stability and the growth curve that drives the decision. Property is a more secure asset and an excellent instrument for fighting inflation, making it a value-added component of the investment portfolio. Buying real estate has proven to be beneficial for everyone, whether they are an end user or an investor. Over the years, it has proven to be the largest asset class in the world, which guarantees profitable returns over a period of time. As an asset, real estate holds a high utility value for the viewer.
Investing in residential real estate offers investors a number of options to choose from, such as studios, apartments, land or bungalows in any geographic area. The growing history of infrastructure will script the success of the Mumbai and MMR real estate market going forward, making it a good time to invest in festive tailwinds now. An array of festive deals complemented by a low interest rate on home loans, a choice of inventory, innovative flexible payment systems, developer deal sweeteners make this a perfect time.
Real estate is an asset that helps to create inherited wealth. For the savvy investor, this should be the right choice.
(By Dr Niranjan Hiranandani, National Vice President – NAREDCO and MD, Hiranandani Group)