Real estate has always been a great and ideal investment option.
In India, investing in real estate generally refers to purchasing a property. Other options in the real estate sector, as an alternative, also offer investment in high-quality assets at a low cost and promise increased returns within a specified time frame.
The most basic form of real estate is land, but even land consists of more than just vacant lots dotted around cities. Land ownership also includes trees, water streams, oil, or minerals (for mining) found on the property.
In-development land is another source of real estate investment. This includes improved land with access to roads and utilities, land in the early stages of development, and transformed land for reuse.
The best way to invest in such properties in India is through individual builder stocks or funds specializing in construction-related projects.
Commercial & Residential Real Estate
Real Estate encloses a comprehensive range of property types:
- Apartments/Flats in Housing Projects
- Single Houses
- Bungalows
- Penthouse
- Villa
- Office Parks / IT Parks
- Malls & Shopping Centers
- Hospitals & Medical Buildings
- Educational Centers
- Hotels and Multiplexes
When it comes to investing, commercial or residential real estate offers a stable income and a greater chance of cash flow (more rental units available for purchase).
Today, many online real estate websites showcase property prices in India while estimating their accurate market value. This is an add-on advantage for real estate investors to make informed decisions based on transparent property price trends in the market.
Real Estate Investment Trusts
These funds, which are structured similarly to mutual funds, were first introduced in India in 2014. These are real estate-related securities that are traded on the stock exchange after being listed.
REIT is considered a profitable and significant potential investment with consistent returns.
Investing in Grade A commercial real estate is one of the major benefits of REITs, which can expand an investor’s portfolio.
Additionally, REITs are stable investment options due to their liquidity as Alternate Funding Mechanisms (AIFs). The Securities and Exchange Board of India (SEBI) approves REITs as transparent investment options with regular returns.
Real Estate Mutual Funds
Investing in real estate through Real Estate Mutual Funds (REMFs) has become an excellent option in India in recent years. This mutual fund scheme invests directly and indirectly in real estate. This scheme’s returns are determined by the market rate.
You can invest even small amounts in this scheme, making it easy to manage.
Fractional Real Estate Investment
The success of this option in Europe and the US has slowly filtered down to India.
The method involves several investors jointly owning a single commercial property. Because the opportunities listed on the platform are high ticket sizes, potential investors can sign up and invest.
This model creates new investment opportunities for premium commercial properties, increasing the potential for monthly rental yield.
Furthermore, given the high ticket prices for CRE, fractional real estate investment offers excellent potential for retail investors with limited access to CRE. It also offers investment opportunities across a wide range of properties and locations.
As a result, the diversification here reduces portfolio risks.
Significance of Real Estate Investment in a Business
- The lower the interest rates of a country, the greater the benefit of investing in real estate. Also, the best investment time is when loan offers are highly profitable.
- The housing finance domain anticipates the most considerable growth potential, followed by services, technology, and trading. Furthermore, it guarantees fixed income, as investors will receive more than the loan they received from home finance.
- Commercial real estate has also proven to be a resilient sector. Moreover, positive investment growth is expected in coworking space leasing.
Concluding it all
Real estate investment is often perceived as requiring a lot of money.
Understanding real estate financing options is essential to a wise investment. The way you fund a specific deal has a significant impact on the investment’s outcome; thus, understanding the financial aspect is critical.
Remember that every real estate financing investment option has advantages and disadvantages, and the financing strategy heavily depends on the property type and situation.
Furthermore, it is critical to recognize what works best for you may not be the best choice for someone else. Resultantly, real estate financing must complement the business strategy.
Beginner investors should also keep in mind that the smaller the market, the lower the risk in real estate. Because of the smaller geographical area, established investors typically do not enter niche markets.
This trend broadens the opportunities for inexperienced investors.
Being Tech-Savy Serves As An Add On!
Being a tech-savvy investor in real estate can take you places.
In the rapidly changing real estate market, it is critical to understand the most recent technological advancements in rent collection, which have simplified communication between landlords and tenants.