India-as a result-has emerged as a service economy, a business domain that has been successfully mastered by its entrepreneurs. So much so that now reverse investment has emerged as an option for Indian institutional investors.
However, with the increasing affluence of the Indian populace, another sector that became accessible to individual buyers is that of property. It took almost 2 decades of accumulated wealth of buyers to create demand and as a result, the property market saw its golden era in the second half of the last decade.
But due to the impact of the world economic slowdown of 2008 and the rising inflation since 2010, the property business witnessed a slow down, eliminating the myth of eternal profits.
Property as a New Option for Investment
Despite the upheavals in the Indian property markets, new upcoming projects are abundantly available and so are the buyers. Whether one is looking for new residential properties in Bangalore or an old house for resale in Pune, properties do not stay on the market for long. What makes real estate a lucrative option in India?
In line with capital investment in economic activities, real estate emerged as a new avenue of high investment and high returns. The purchase of properties has been compared to purchase of gold. However at the asset size is remarkably different in both cases and their utilitarian uses also vary. For starters, tenants cannot live in gold and pay rent!
Property presents investment prospects which can provide sustained returns and easy options for purchase. Given the size of associated prices, home loans are easily available and individuals are allowed to pay them off in decades. This is because a lot of people do not purchase houses as investments but as accommodations for themselves and their families. But this does not stop individuals from purchasing homes, put them on rent and clear the loan more quickly and sell the property off for a profit.
Enhanced Purchase Power
With the increased purchase power, the demand for properties in India has increased. The expat community invariably is a small but prominent component of this demand. Chennai, for example, has been known for its traditional housing. Today, due to the increased demand for the expat lifestyle, luxury high-rises are also available in the city. The construction of Trump Towers in Mumbai is also a clear sign of property investment opportunities in the country.
The formation of a stable government at the centre has ended the apprehensions of policy paralysis. The new government is planning to introduce the first Real Estate Bill in the winter session of the parliament this year. This bill will further streamline the business processes related to property and therefore the investment would become easier. With defined processes in place, the institutional investment in the country will also increase.
For a long time, property business in India was shady at best. However after those initial “gold hunt” days, the processes became more transparent and accession of a property became easier with increased purchase power. The modern realty market now is ready for serving both the masses and the classes.