8 Advantages of Investing in Indian Real Estate

Real estate investment is always considered to foster your financial growth. Here are the top 8 advantages of investing in real estate.

In India, the real estate industry is likely to grow to $1 trillion by 2030 from $200 billion in 2021 and to account for 13% of GDP by 2025.

The Indian Real Estate industry is booming and has been incorporated into several successful investment portfolios due to its high return on investment (ROI) value. According to a survey, real estate makes up 77% of the average Indian household’s total assets.

The demand for real estate is constantly growing. Real estate is a good investment choice in India since there is always a high demand for it. With the increasing demand for Pune, investing in a residential area in Pune can also be a good investment.

In India, it is often seen that real estate investments produce returns that are significantly more than the rate of market inflation. Consequently, it offers a better return on investment (ROI) and a better profit.

The real estate market would increase from Rs 12,000 crore in 2019 to Rs. 65,000 crores by 2040.

Why Invest in Real Estate in India?

Investing in the real estate sector has many benefits, like passive earnings equity, recurring rent, tax benefits, etc.

In one year, the top 7 cities in India’s real estate market saw land sales totaling more than 1,700 acres. Between 2017-2021, $10.3 billion in foreign investments were made in the commercial real estate industry.

With an increased demand for business and residential spaces, the Indian real estate market has recently experienced rapid expansion.

In the third quarter of 2021, the top three cities—Mumbai (39%) NCR-Delhi (19%), and Bengaluru (19%)—attracted 77% of all investments.

After the agricultural sector, the real estate industry in India is the second largest employer. Additionally, more non-resident Indian (NRI) investment is likely in this industry over the long and short terms.

NRIs are expected to choose Bengaluru above other cities for investment, followed by Ahmedabad, Pune, Chennai, Goa, Delhi, and Dehradun.

Advantages to Invest in Indian Real Estate!

Real estate investment is also the finest inflation hedge. Additionally, it is a financial decision that enables one to live a lavish life, safeguard the future, and leave a lasting impression on the next generation.

The value of real estate always rises with time. When it comes time to sell, a wise investment might provide a sizable return. Additionally, rents tend to rise over time, increasing cash flow. History shows that the profit is more from real estate the longer one clings to it.

Bubbles and crises that lower property appreciation always cause the housing market to rebound. After even the most unsettled periods, prices always return to normal, and appreciation resumes.

1: Return on Investment (ROI)

Real profits are available since real estate investment returns are higher than inflation rates. It provides a high return without taking on much risk, especially compared to other high-reward choices like direct shares. With legal assistance, the real estate investing procedure is also relatively simplified.

REITs own real estate, including office, retail, hotel, apartment, and warehouse facilities. A stake in these properties is purchased when investing in a REIT. Unlike mutual fund investment, however, a REIT deals with real estate instead of equities.

There are two methods to profit from a REIT: First, investors get consistent dividend payments from REITs. Second, selling an investment for a profit if the REIT’s value increases.

2: Investing in Residential Property

The Indian economy is heavily reliant on the real estate sector. Housing for families is provided through residential real estate; many people get much of their wealth and savings from it.

As waiting for the property’s value to increase, renting it out is profitable. The property can be sold for a profit if its value has increased sufficiently. More NRIs are also investing in this industry over the long and short terms. However, the property’s location plays a significant role in its value.

3: Commercial Property

It is similar to making money from investing in residential real estate. After purchasing a property, tenants would have to pay monthly rent. The business space can be sold for profit if the property’s value rises.

There is a diverse variety of commercial real estate kinds, from owning an office building and charging businesses to rent spaces to buying malls or other retail sites and charging business owners a monthly fee.

There is never a guarantee that the commercial property will improve in value. Therefore, it is crucial to research the properties and the neighborhoods. The dangers are the same as investing in residential real estate.

4: Tax Benefits

Real estate investing has several tax advantages. One can save up to Rs 1.5 lakh on the principal amount of a house loan under section 80C. Similarly, section 24 allows for a reduction in the amount of interest that must be paid by up to Rs 2 lakhs.

It will lower taxable income significantly while making real estate investing cheaper.

Tax deductions are available for many items, including mortgage interest, business expenses, cash flow from other assets, and more.

5: Safe & Secure Option

A real estate investment can be much safer than other assets like the stock market, gold, cryptocurrency, and banks. The stock market is constantly changing, and gold prices may assist in moderating market volatility but also come with additional aggravations, including storage and theft problems.

The introduction of RERA, lower home loan interest rates, and other factors have increased the real estate sector during the past several years. On the other hand, interest rates on bank savings accounts are low, especially when contrasted with the growing inflation.

6: House Flipping

Flipping a house is a common strategy investors use to earn quick money. It happens by purchasing a house for less money, swiftly refurbishing it, and then selling it for a quick profit.

Here, choosing the ideal residence is the key. When flipping a house, one is not concerned with the monthly rent. Instead, pay as little as possible to sell the house for a profit.

7: Tangible Asset

Being a physical asset, real estate may be used to profit from various income sources while experiencing capital growth. Unlike other investments like stocks with minimal or no tangible value, real estate’s strong tangible asset value offers perpetual security because its value will never decline.

Real estate has no insurmountable financial obstacles and is simple to buy, finance, and improve your lifestyle while offering tax advantages.

8: Leverage

Leverage, or the capacity to invest little of one’s own money and borrow the rest to purchase a property, is a significant advantage of real estate investment.

Investing in quality real estate for as low as 15% of the total purchase price, coming up with a down payment from savings, and obtaining a home loan to cover the balance of the cost of the property. It means one just puts a minimal amount of money into the property but still gets to own it. Additionally, it guarantees that an individual only invests some of their profits in real estate.

Frequently Asked Questions Regarding Investment in Real Estate!

Is Real Estate a profitable investment in India?

Ans- India has a high RIO, and it is frequently observed that the profits from real estate investments are significantly larger than the market inflation rate. So, yes, it is a profitable investment.

Why should you invest in the Indian Real Estate sector?

Ans- Rental income is not subject to self-employment taxes. At the same time, the government provides tax advantages for mortgage interest, insurance, maintenance and repair costs, and even property depreciation. For their long-term investments, real estate investors receive reduced tax rates.

What is the future of Real Estate in India?

Ans- Smart houses and automation using IoT, AI, and other technologies are on the horizon for the industry. Moreover, the value of properties is constantly increasing, including many real estate projects coming up across the country.

How is Real Estate affecting the Indian Economy?

Ans- According to the Government of India, the real estate sector will be worth 1 lakh crore by 2030, accounting for 18–20% of India’s GDP.

Conclusion

Participating actively in the rising Indian real estate industry will pay you in the long run.

The residential sector is likely to increase dramatically. The need for commercial and retail office space would rise as more infrastructure will likely be built in metropolitan areas, for example, metropolitan residential areas in Pune, Bangalore, Delhi, etc.

Moreover, it can provide a consistent income, stability to the portfolio, and relatively low-risk leverage. Long-term returns on real estate have the potential to be quite large. It offers a consistent cash flow and has several tax advantages.

Rental income is not subject to self-employment taxes. At the same time, the government provides tax advantages for mortgage interest, insurance, maintenance and repair costs, and even property depreciation. For their long-term investments, real estate investors receive reduced tax rates.

Since everyone needs a place to live, real estate is needed, and investing in it helps address this issue and safeguard the future.