Benefits of investing in real estate
Lending rates are at their lowest
The Reserve Bank of India had announced a cut in the repo rate, which will bring down home loan interest rates, as most of the banks have launched repo-rate linked home loan products. At present, the repo rate stands at 4.4%, the lowest ever. For those who have sufficient liquidity to invest, this could be a perfect time to strike a deal and get your home loan approved before things get back to normal.
Builders and property agents are desperate to clear their inventory, to generate liquidity and resume cash flows. Some of the builders are also offering refundable booking amounts, to persuade home buyers. So, this can be a good time for you to negotiate a deal with your developer/agent. If you have already visited the property before the lockdown, you are in a position to make a decision when it comes to a ready-to-move project. For under-construction property, you can take a video walk-through or a 3D tour of the sample apartment. Also, understand the locational advantages, neighbourhood, amenities and facilities available around the project. Factor in the final price, only after taking a realistic approach and assuming that project delivery will be delayed.
Demand has dried down and new supply is no more entering the market, due to the lockdown. Once everything gets back to normal, it will take at least a month for real estate construction to gain pace. “Once the lockdown gets lifted, it will take time for developers to resume construction work, as most of the labourers have left for their home towns,” says Jaxay Shah, chairman, CREDAI National.
That means supply will take a little more time to pick up than demand. This can bring an upward trend in the property prices in the post-COVID-19 world, which means you may have to pay more than what you have to pay today, for the same property.
According to Niranjan Hiranandani, national president, NAREDCO, “If construction slows down once the lockdown is over, we may see ready possession homes attracting a premium.”
Real estate is the perfect asset class
Real estate is certainly a safe bet for investors and their interest is far from over. “Real estate will prove to be the perfect asset class in terms of both, regular income as also capital value appreciation. As of the past week, a segment of real estate developers have been getting investor queries about buying pre-leased properties or residential properties, which have high demand for being given on rent,” says Hiranandani, who is also president of ASSOCHAM and co-founder and managing director, Hiranandani Group.
Once the lockdown is over, experts expect higher returns from the market, which certainly makes this a perfect time for investors to sign the deal. “We are hopeful that the expected ROI for the realty sector could be seen at approximately 1.7x (almost 2 times) for residential and 1.5x for commercial, within three to five years’ time. The Indian rupee has witnessed depreciation, owing to the downfall of the global economy. This might attract foreign investment to India in the coming months,” adds Shah.
Source: An article from Housing.com