Real estate investments are a great way to earn rental income. As the year 2021 comes to a close, the pandemic-fueled surge in house purchases continues. Despite being in the traditionally slow season for real estate, homes are nevertheless selling for much above the asking price in most cities. In most areas, buyers are still having difficulty finding homes. The use of cash predominates. Most markets continue to have low levels of home inventory. And, for the fortunate homeowners who have managed to obtain houses, housing values are still increasing. With so many unexpected housing market patterns, it begs the question of what will happen to real estate and your real estate investments in 2022.
What is real estate investment?
Real estate investment is acquiring property to generate rental income rather than living in it as a residence. In layman’s words, it is any land, building, infrastructure, or other physical property, immovable yet transferrable. Real estate is one of the safest investments. They can get profitable or create money even during a recession if done correctly. Real estate investment does not have a predetermined maturity period like other investments such as fixed deposits and bonds. The owner is the one who decides whether to keep or sell the property. Real estate investment can be advantageous in the long run. It has the potential to deliver substantial profits if done correctly. Residential real estate and Commercial Real Estate are the two types of real estate investment in India.
What are the real estate investment strategies?
Purchasing real estate might be a considerably better investment than equities and bonds. The wonderful thing about the real estate investment market is there is no one-way strategy to invest in it. Real estate can get invested in numerous ways. Let us take a look at the real estates’ investment strategies.
- Rental Properties: Investing in a rental property and renting it out is a terrific strategy to gain money from real estate in India. It guarantees a steady rental income. Approximately 30% of individuals live in rental dwellings, according to the RICS-Knight Frank Report.
- House Flipping: Flipping is a type of real estate investment in which you purchase a revenue-generating asset, generally an aging building, with the potential for value appreciation through restoration and refurbishing. House rehabbing is another term for it. It is a sort of wholesale real estate investing in which investors purchase a property for business rather than personal usage. Property renovation is still one of the most rewarding real estate investment strategies.
- REITs: A real estate investment trust (REIT) is a firm that invests in revenue-generating real estate. Thus, investors would get rental income, gains from sold properties, or payments on mortgage-backed securities loans. REITs can provide capital gains as well. But, the monthly dividend income is generally the most enticing aspect. The REIT’s earnings are likewise not subject to income taxes. They give out 90% or more of their income in dividends to their shareholders. The incentive to invest in REITs is smaller investment ticket sizes for investors.
- Commercial Real Estate: Commercial real estate investing is an appealing investment choice. Commercial real estate investment always delivers a continuous stream of cash flow and asset appreciation despite the market volatility. Commercial real estate is a steady source of rental income and revenue for the foreseeable future. Commercial-grade property ownership includes office complexes, warehouses, and factories.
- Fractional Ownership of CRE: The ownership of a high-value item by enabling unrelated persons to share passive ownership is known as fractional ownership. In addition, investors can divide the revenue and expenses connected with this asset in proportion to their investment. It is the ideal investment because all members share the property’s expenditures and financial obligations. As a result, the exclusivity of HNIs in commercial real estate investing gets challenged.
- Crowdfunding: Investing in real estate used to be a lofty objective for the average investor. However, this is no longer the case. Real estate crowdfunding is an innovative way for investors to pool cash for a real estate project. Initially, they gain money from leasing revenue. Furthermore, crowdfunding allows investors to participate in high-end commercial real estate developments without managing the property.
What qualifies as a decent real estate investment return?
Real estate investment is a terrific method to gain money and build wealth over time. If you decide to invest in a rental property, you will generate money by collecting rent from your renters. But how can you know whether your real estate investment return is good?
Also, a fair real estate investment return is often greater than 10%, although 5% to 10% is generally acceptable. When you need to estimate ROI, keep in mind that there is no right or wrong solution. Different investors assume varying amounts of risk, which is why understanding your budget and calculating possible returns are critical.
Which is the best place to buy a house in 2022 in India?
Are you looking to buy or invest in real estate and not sure where to start? If that’s the case, there’s some good news for you. According to ANAROCK, the Mumbai Metropolitan Region (MMR), Bengaluru, and Pune are now the top three locations for purchasing properties for end-user and investment purposes, with possibly adequate price appreciation over the next 5-10 years. So, real estate investment offers a lot of potential in 2022. Property values in big cities that had remained steady have begun to exhibit some favorable movements. In addition, the rental market gets predicted to emerge from a period of stagnation. Now, which are the best cities in India for real estate investment in 2022?
- Mumbai: Despite soaring rates in other major cities, Mumbai remains a hot favorite with investors. Because of being the nation’s financial center and its most powerful economic development engine – Mumbai. Mumbai is one of the contributors to India’s overall GDP, attracting investors from all around the world. Despite the pandemic, MMR’s real estate market remained busy in 2020. Its unsold home inventory fell by 6%, the most in 2020 compared to prior years. Current infrastructure developments and several metro linkages, the Mumbai Trans Harbour Link, make it a desirable investment location. Other advantages include a limited-time stamp duty reduction and the lowest-best home-loan rates. The cost of acquiring property in MMR has dropped by anywhere from 5% to 15% – a previously unthinkable prospect. The recent limited-time 50% cut in building premiums may assist home prices falling by 5% to 7%.
- Bengaluru: Bengaluru’s housing sector has continually weathered the test of time, proving significantly more resilient than most other large cities – not only before but even after the epidemic. While property sales in other cities began to recover only after pandemic lockdowns were lifted, Bengaluru house sales performed well even throughout the lockdown. The city’s fundamentals — reasonable price, high-quality items, on-time delivery, and so on – give it an advantage over other cities. Bengaluru is also an evergreen property investment destination due to its prominence as an IT/ITeS center. According to ANAROCK Research, the average property price in the city is significantly less than most other leading cities. Interestingly, Bengaluru was named the top most liveable city in India in the Ministry of Housing and Urban Affairs’ 2018 Ease of Living Index (MoHUA). This sought-after title only adds to its allure.
- Pune: Pune has a unique combination of IT/ITeS, manufacturing, and services industries, which offers it a significant competitive edge. Furthermore, it consistently promotes itself as a substantially cheaper housing market than neighboring Mumbai. Nevertheless, providing a comparable lifestyle – and, according to the most recent Ease of Living Index, a superior one. Over seven years used to evaluate price growth across cities and marketplaces, Pune recorded an increase in average property prices, up 38 percent between 2013 and 2020. According to ANAROCK Research, the average property price in Pune in 2013 was Rs 3,980 per sq. ft. In 2020, this will rise to Rs 5,510 per square foot (a 38 percent jump). In the most current Ease of Living Index issued by the Ministry of Housing and Urban Affairs, Pune was named the top liveable city in India (MoHUA). This sought-after title only adds to its allure.
Assetmonk is one of India’s top real estate investment companies, offering real estate solutions. Invest in India’s premier cities like Hyderabad, Bengaluru, and Chennai. Assetmonk offers tailored real estate investment for the client with an IRR of 14 to 21 percent each year!
