The Indian Real Estate is now experiencing rising transparency and discipline in property dealings .
In 2013-18, residential property price appreciation in India bottomed out to a mere 12 percent – which effectively worked out to a little over 2 percent annually, even for properties at prime locations.
In the unorganised real estate, the drop is nearly 40 percent during 2009-12.
Real Estate – Geographically
The Indian Realty can be studied on the basis of different areas and region.
Hyderabad saw exponential rise in land price during 2004-08, which translated into growth in major localities.
Pune saw a significant IT boom during 2009-13, as a result of which land prices appreciated by as much as 60%.
Talking in terms of returns, Indian realty cannot be generalized due to varying growth in different states. There are some parts of India that performed extraordinarily well while others didn’t.
Some markets are almost end user-driven, which puts the lid on speculative price hikes. Others are oriented more towards investors with a long-term view.
Real Estate over Stocks
According to ANAROCK’s consumer sentiment survey for H1 2019, 25% respondents went with stocks and Mutual Funds, whereas, more than 57% went with real estate, which further affected the fixed deposits and gold.
So, as Indians’ inherent love for properties is not collapsing anytime soon, the Indian realty shall keep growing in the years to come. And investors have evolved in their outlook, now more mindful of alternative options in the residential space itself.
Affordable housing can give returns to the tune of 8-10 % in the long term. There are also a number of alternative residential real estate investment options, including serviced apartments, senior citizen living, Smart City-based housing, and co-living.
Commercial Real Estate
Earlier, most of the investors banked on residential properties. But, today, wealthier investors invest in commercial ones and sectors like warehousing. Also, REITs (Real Estate Investment Trusts) are keeping investors hooked to the commercial real estate.
Indian commercial properties are generating a lot of interest among wealthy investors. Commercial properties in the real estate sector have performed much better than housing over the past few years.
Housing sales across major Indian cities have seen a slowdown, especially after demonetisation (DeMo), implementation of the Real Estate (Regulation and Development) Act, 2016 (RERA) and the Goods & Services Tax (GST). Meanwhile, commercial office leasing ROI has relatively gone up.
Earlier, investors invested in residential properties by purchasing and selling them off in time. But, the same will not make sense currently due to the new regulatory environment and existing norms in Indian realty.
In the real estate sectors in the developed countries, alternative residential real estate investments for the long term have earned returns on par with those of equity and Mutual Funds.
Indian Realty as of now is in an unpredictable state and Indian housing prices will hardly see any shift. But, the state might change in the future and good returns can be expected from the realty.