With India emerging as a favourable destination for investments across various asset classes in real estate amidst enhanced housing affordability, infrastructure push and favourable investment policies, there’s never been a better time to leverage the full benefits of real estate investments. .
When it comes to the key benefits that are influencing the investment sentiment, with well-chosen assets, investors can enjoy predictable cash flow, excellent returns, tax advantages, and diversification. And it’s possible to leverage real estate to build wealth. Real Estate investors generate income through rental income, appreciation, and profits generated by business activities that depend on the property. Another factor is the high appreciation of land which is a lucrative proposition for investors to get better yields and returns, especially at a time when the rate of appreciation is much higher than it was few years ago.
Wealth creation and the opportunity to diversify are other reasons that are garnering interest from investors as by investing in land, there is a huge range of potential for monetization. The investor could just hold the land for long term, build a structure on it to lease out, have a holiday property and can earn pay-outs from there too.
Real estate gives about 8% yearly returns, higher than 6% returns by the fixed deposits in a bank. Though gold and equity/mutual funds offer respectively 13% and 10% returns, real estate provides double benefit in the form of handsome returns and healthy property appreciation.
Infrastructure Boost to Realty Investments
Though real estate as a sector depends on various internal and external factors, the development of Infrastructure and civic amenities help in the development of the city, positively impacting the real estate. Several factors such as employment, regional connectivity, accessibility to healthcare and educational facilities, safety and security, environmental sustainability, good governance, and socio-political stability are key growth drivers for investments.
Investment in Land
Investing in land and monetizing it in rental format gives 10 times higher yield than ready apartments. There has been a spike in demand for investing in land at a nature friendly location and across key tourism destinations. The concept of investment in serene locations has gained significant traction during the lockdowns and travel restrictions during the pandemic and is now on an upward trajectory. Among key parameters for land investment, location is the most important factor in the purchasing decision for investors. About 70-80% of investors expect just about 2-4 hours of commute to their weekend getaway. About 50% of the investors want their investments to be near natiral elements like water bodies and hill stations. More than half of the investors prefer to build weekend homes and rent out the properties for better rental yield.
High Potential Emerging Micro- Markets & Investment Corridors
As real estate sector continues to get traction, coupled with acceleration in infrastructure developments, micro markets across major metropolitan cities are evolving as key investment corridors. The micro-markets close to financial and industrial hubs in major cities are anticipated to gain more traction in the coming years and holding real estate in these micro-markets is the key to securing and enhancing wealth for the smart investors. In fact, the demand for villas, farm houses, plots and land acrooss key destinations close to nature and proximity to metro cities have increased 2X post-covid.
Maharashtra-Neral-Matheran is the financial capital, economic powerhouse, and industrial hub of India. This business hub, with an established media & entertainment industry of Mumbai is one of the most vibrant and dynamic real estate markets in the country due to high property prices, limited land availability, and a growing population, which creates significant demand for real estate. The locations such as Vasai Virar, Bhiwandi, Neral-Matheran, are the key hotspots, led by availability of non-agricultural large land parcels along key upcoming infrastructure developments and presence of branded developers.
The Neral-Matheran corridor has emerged as a major hotspot amongst investors due to the presence of branded developers with sizeable real estate projects, proximity to the city centre, and well-established social amenities like Bhimashankar Wildlife Sanctuary, ND Film Studio, Neral-Matheran Toy Train, Rambag Point. The Neral-Matheran micro-market is considered as one of the key investment regions with an average annual rental yield of 15% for holiday homes and is expected to achieve 5X return on land investments in the next 10 years.
The tourism and industrial hub of Gujarat – Sanand Nal Sarovar corridor, ECR in Chennai, Medchal in Hyderabad, New Town, and Rajarhat in Kolkata are also attracting investments. These corridors with ample amount of land availability, increased traction in tourism and uptake in infrastructure are emerging as attractive investment destinations with an average annual rental yield between 2.5% – 4.0% and price appreciation for land between 6 – 8% annually.
The real estate investment market for land is still at nascent stage of development in few corridors, while corridors closer to tourism destinations and metro cities have grown multiple times.with increased investments. Therefore, the growth rate of second homes or weekend homes in India is expected to grow multiple folds led by wide infrastructure projects- planned and under construction across the states.
Better infrastructure, affordability, higher rental yield, scope of capital appreciation, tourist attractions, proximity to city center are the key parameters while looking for any investments. These factors, together with the rising popularity of remote work and flexible work options, have contributed to make tourism destinations in India more attractive to investors. Overall, Neral-Matheran in Maharashtra and Sanand Nal Sarovar in Gujarat are attractive to real estate investors seeking higher returns due to their lower capital investment as well as the potential for price growth and higher rental yields. However, the investors should also do their due diligence and carefully evaluate the risks and opportunities before investing in any specific region.
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