Profitable Real Estate Investment Growth In India 2022

Profitable Real Estate Investment Growth In India 2022: With Nine Million plus Indians looking for homes, real estate is going to be the biggest vertical in the Indian economy and is poised to grow at more than double the industry average in the next 10 years. 

Real Estate in India in year 2022 will be a key driver of economic growth. The respective sector is expected to grow by 7% in fiscal year. Due to the high growth in the sector, India is expected to be the top nation to invest in real estate in 2022.

Real estate investment increased from 41% in 2015 to 57% by 2021 thus playing a key driver of growth in the Indian economy. The industry will see more demand due to growing consumption across the country.

Retail is one of the most attractive sectors for investors in real estate. With fewer malls in India, retail is one of the ways to increase overall investment growth in India. In retail, investors in India have more access to equity investments in real estate. Retailers can use this opportunity to sell their existing inventory by 2022. Due to high demand, retailers will soon see high growth in this segment.

Mortgage lending has been a new trend in the industry. Now, many corporates are using this opportunity to sell existing stocks. The mortgage companies in India are offering large-scale loans, which will help investors to buy homes in India. The market in India is expecting higher growth in residential segment in 2022.

Employment opportunities are increasing as real estate market in India has grown more than 2 times in the past 5 years. In fact, the infrastructure sector accounts for one-fourth of overall employment in India. With growing investments, more people are going to be working in this sector. This will boost employment opportunities in 2021-2022.

Real estate as a real asset class and as a real investment option for India remains elusive for the mass of urban Indians. The investments in real estate under the concept of property rights remain poorly conceived and executed. The sense of ownership of land seems to have evaporated and property rights are being sold, co-opted, and turned into leases or temporary transactions.

Further, there is an inadequate focus on quality and not necessarily real returns on real estate. Real estate ownership, if and where there is ownership at all, is largely located in the nation’s top or top-end real estate in highly-rated cities like Mumbai and New Delhi.

As real estate remain confined to infrastructure developments in prime locations in India, with the ability to lease out excess spaces for returns, the returns on infrastructure investment in India continue to look nominal at best, and non-existent at worst.

Indian Real Estate market has several challenges, with current limitations

(i) Low understanding of the fundamentals.

(ii) Excessive focus on short-term income.

(iii) Real estate investments in India in comparison to the global investment world have also not looked glamorous with slow realizations and limited liquidity.

(iv) The commercial and residential property market in India continues to be quite competitive with wide spreads, high vacancy levels, and the ability to borrow from financial institutions largely untested.

(v) Foreign investments in real estate in India have always faced challenges due to delays in processes and lengthy due-diligence processes.

(vi) Additionally, real estate sector in India rely on a large number of housing developers, which have not created lasting economic value. In particular, the difficulties in getting desired residential projects approved are a real source of trouble for investors and developers.

(vii) A slowing economy, imposing higher risk to both domestic and foreign investors.

(viii) Weak credit growth, amidst increasingly urgent need for more homes.

Thus, despite the amount of capital currently being invested, there is no real growth in wealth creation. Even within India, real estate market have struggled to achieve long-term wealth creation for investors as the risk of falling stock prices continues. While it is true that property has been the first choice of investment for several years, in other words, investments in India will continue to be real investments in real estate markets.

Real Estate Investments Growth in India, in the form of residential or commercial in prime locations in urban areas, are likely to remain dominant. Commercial sectors will become more balanced, with the introduction of the Real Estate Investment Trust (REIT) in India. Investors will have more options to invest in the commercial sector. Thus, even if there are no significant structural changes in real estate investments in India, the current reality is that real estate investments will have to move to the next level, given the current lack of returns from such investments.

India has now become the world’s fastest-growing real estate market, driven largely by the low-interest-rate environment in developed countries. Low interest rates have led to a fall in returns and as an investment in real estate continues to get more expensive, real estate investments in India will have to do better than markets of developed countries.

This will require real estate in India to either improve their returns or to focus on commercial investments. The latter option would require focusing on a mix of residential and commercial investments.

RERA and Real Estate: The potential for real estate to support RERA’s product is enormous. A report by India Ratings estimates that customers would spend a minimum of Rs.150,000 in a year, which would require about 37% of the existing investments to be invested in real estate.

Partnering with a real estate firm would help RERA succeed in meeting these challenges by increasing the reach and providing a more advanced service to customers.

Demand for real estate is increasing at an annual pace of 10-15%, leading to an inflow of capital from retail investors in the last few years. However, sales remain low and bulks of investments are still in the form of loans.

Real estate firms, thus, would benefit from RERA’s model in three ways:

(i) RERA’s deposit-based model would allow a strong incentive for existing retail investors in real estate to move towards RERA deposits and invest a substantial proportion of their RERA assets.

(ii) RERA’s ability to offer investments that are static and aren’t subject to price volatility would appeal to retail investors.

(iii) RERA’s retail-focused model will allow real estate firms to reach a new demographic of customers.

The concept of RERA is also relatively unique. Unlike other deposit-based lending models, such as loans and mutual funds, RERA deposits have a fixed tenure. They are in some cases linked to inflation. There are several advantages of a fixed tenure deposit-based loan. It enables long-term loans to individuals with good credit histories at low interest rates and removes market risks. Moreover, when loans are secured against RERA investments, the asset could be sold or repurchased at any point of time.

Conclusion: Based on the current demand in India, investment opportunities across various segments will continue to remain limited in the future. Real estate investments in India, by and large, involve projects in prime residential and commercial markets in top-tier cities in India.

Most of the existing investments in India are in the form of residential investments. A shift from residential property to commercial property and from commercial estate to mixed-use real estate is therefore likely.

Real estate is emerging as a real driver of economic growth, as most of the cities are reporting significant growth in terms of housing. With growing investments and growing awareness about property, there will be more growth in the sector.

Also Read:

What Is Micro Flipping Meaning Methods Process Psychology

28 New Year Financial Resolutions Tips To Save Money In 2022

#realestate #india #2022 #microflipping #property #growth #economy

Love .... KoolGuruJi