Did you know that the real estate market is expected to grow at 30% in the next ten years? That’s what the Indian Brand Equity Foundation (IBEF) suggests. Also, India is ranked ninth in the Global House Price Index with regards to real estate investing. These reports showcase the country’s real estate prowess. Even though this sector does go through cyclical peaks and troughs, Indian investors have largely relied on properties to fetch them high returns in the long run. So, why should you be in the dark about property investment? As a guide to real estate investing for beginners let’s look at some of the avenues that can help you as well:
✓ Plots: Investing in plots can be a decent and smart real estate investing for investors looking for capital appreciation. However, it’s vital to choose the location carefully as part of real estate investing. For instance, investing in a piece of land in a developing locality can be a good start. You can also give the land on lease for agricultural use or construct a commercial building on it.
✓ Residential properties: Houses and apartments are considered as residential properties. You can earn a steady income by letting them out for people to reside in on rent or lease. As the value increases, it offers you capital appreciation over the long-term. However, there is a vacancy risk associated to it. You may suffer losses if your house is not on rent for some time.
✓ Commercial properties: Basically, it refers to investing in buildings that are exclusively used for business activities. Investing in commercial properties can provide you both a regular income and capital appreciation over the long-term.
✓ Industrial properties: Warehouses, factories and distribution centres’ are a few examples. The key benefit of investing in industrial properties is that it can yield you a higher income with longer leases. Also, these properties are usually low-maintenance because most of the industrial tenants takes care of this part. However, the risk is high as they are more expensive and also vulnerable to economic conditions. Investor need to be prepared for long-term vacancies and higher loan rates.
✓ Real estate investment trust (REIT) funds: REITs gives you an opportunity to make securitised real estate investments. This fund invests ‘pooled money’ from various investors in completed real estate projects. This means that investing in REITs can help you invest in properties in smaller amounts. The income generated from fund investments are majorly distributed in the form of dividend to investors. REIT funds also offer easy and quick liquidation of investment. As they are regulated by SEBI, there is a fair degree transparency in the investment.
To sum up, in a developing country like India, there is always more focus on infrastructure development. Considering the scope of growth over the long-term, real estate investments can be a good option to invest in. Now that we know how to start investing in real estate, it is also important to consider regulatory reforms and the interest rates before you invest in a property or REIT funds.
Purchasing real estate is more than just locating a spot and making it one's place of residence. Almost every individual maybe called to conduct a real estate transaction at some point in their lives. The process of real estate investing can be an intriguing opportunity for some, while others find value in the capture and creation of a sale. Since, investing in real estate has become a common investment vehicle; it makes sense to know all about it. The above mentioned pointers can be your helpful guide in making the right decisions with regards to real estate investments.
Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.