This year began with a positive trend for the real estate sector which was witnessing a slump during the past couple of years. The new government has shown great promise to boost this sector. As Modi government turned on three mega missions took shape. These include Smart cities, AMRUT cities and Housing for All by 2022, which are expected to turn Indian cities and towns as new engines of growth. While the market trends took a positive turn, increasing property prices, delayed projects and high rates of interest on home loans kept the fence sitters from taking a plunge.
Real Estate ‘The Best’ Asset class for Investment
A conventional investment portfolio of an Indian investor has gold, real estate and mutual funds. But with so much going on in the market, Real Estate has once again come up as the show stopper. Genuine requirement for home and lower rate of interest are the main reasons. Real estate evolved as the best asset class for investment.
Real Estate Investment Trusts (REIT) has various advantages and is now introduced in India; this means more transparency, professional management, a steady stream of dividends and access to an alternative source of capital. The Real Estate (Regulation and Development) Bill is another boon for this sector. This bill will enhance the transparency in this sector and hence attract investors.
The low-to-mid priced housing segment is likely to be the main focus of the builders amidst support from government incentives. Currently 60% of the launches are in this segment. Buyer demand is to be the strongest in the low-to-mid section housing.
Improving macroeconomic environment, real estate investment and transparency flows should feed through to stronger office demand in the medium term. Higher occupier demand in Tier 1 and 2 cities is expected to see vacancy decline while activity is supposed to be maximum in Tier 1 cities. The real estate sector which is linked with the economic performance is going to be a major beneficiary in the strong Indian economic growth.
The major drivers supporting the real estate sector are urbanization, rising income levels, young population and growing number of nuclear families along with fast growth in the manufacturing and service sector. The GDP is expected to increase many folds so the size of the sector is also expected to increase. Residential sector which contributes to 80% of the real estate segment is expected to grow with more focus on affordable housing and low to-mid income housing. Commercial sector in the real estate segment is also seeing a positive trend and the real estate market is finally seeing an upward graph.
Read More About……Why should NRIs Invest in Indian Real Estate?