Why to Include Real Estate in Your Investment Portfolio for 2016?

When it comes to investment, everyone has preferences which are broadly contingent on the person’s patience and willingness to take risks. It’s imperative that you understand how various asset classes (equity, gold, FD, real estate, etc.) react to external factors and return on investment (ROI) they provide under these changing conditions. Real estate is picking up pace once again after 2-3 years of sluggishness and there are many residential & commercial projects by leading real estate developers in Delhi NCR (and other parts of India) that promise to give impressive ROI to investors.

Future of Real Estate Industry

A recent report published by the India Brand Equity Foundation has corroborated the fact that real estate industry is growing at a steady rate. Given its upward trend, the report predicts that the real estate market could reach US$ 180 billion by 2020. For the period of 2008-20, the market size of this industry is expected to increase at an impressive CAGR of 11.2%. The Delhi NCR has also emerged as the biggest office market in India with 110 million sq ft, reiterating the fact that this area is attracting big corporates on a consistent basis.

Supportive Governmental Policies

The biggest boost to real estate industry is provided by more active & favourable governmental policies that have revived investors’ confidence. The Union Cabinet has recently approved the Real Estate (Regulation and Development) Bill with some amendments that will bring added transparency to the property transactions and make sure that the various on-going projects complete on time. To pump more capital in the real estate industry so that projects could be completed faster with best possible amenities, many positive steps are taken by the government in the areas of FDI, Real Estate Investment Trusts (REITs), and External Commercial Borrowing (ECB).

Upward Movement in Real Estate

As with many other asset classes such as equity (share market), real estate industry goes through cycles of upward & downward movements where it goes through a correction phase. Many property experts have stated that the downward movement is about to end and favourable policies towards the industry have given a new impetus which is only going to make real estate more lucrative for investment. The entry-level prices at this point for many on-going & upcoming residential and commercial projects in various new investment hubs like Greater Noida West, Yamuna Expressway, New Gurgaon, etc. are quite appealing and over the coming years they are likely to show considerable appreciation.

Real Estate, Safe Long-term Investment

Real estate investment is always compared with other asset classes that provide significant returns such as equity market. Both of these investment options have their unique risks & returns. One area where real estate investment trumps over equity is that it is not as sensitive to external market factors as share market is; this protects your investment from sharp depreciation. Though, it is important to mention here that real estate investment is largely a long-term investment as this time-period will bring the desired ROI. In the mean time, you always have the option to rent the property to get continued earnings.

Leave a Reply

Your email address will not be published. Required fields are marked *