Long-term Real Estate Outlook: Where should you put your money: residential, commercial, warehousing, or data centers?
In India, real estate investment has grown at an incredible rate in recent years. While property sales dropped significantly during the pandemic, they increased in the previous year. We reviewed the prospects for real estate investment in the next years, as well as the sector’s success during the last 5-10 years.
Around 80,000 units were sold in the fourth quarter, representing a nearly 121 percent year-on-year growth. In H1 2022, we will have around 1.50 lakh units, a 72 percent increase. These are extraordinarily resilient figures when compared to the black swan incidents that occur every 2-3 years. According to the report, the investment sector has returned, and this year may be the strongest yet, for commercial and residential real estate.
In terms of marketplaces, even in big cities such as NCR, Bengaluru, and Mumbai, various pockets do better than others. For example, in the NCR, while Delhi does not provide excellent returns, Gurgaon does, and even in Gurgaon, there are a few regions or pockets where residential real estate has provided decent returns. Each market has acted extremely differently.
Investment experts debated the kind of returns purchasers might anticipate from residential real estate vs commercial real estate, as well as the sector’s new growing sectors – warehousing and data centers. The real estate industry has been declining for many years, but in the last year or two, following the pandemic, transactions of residential real estate have surged, and many real estate developers are doing well in all areas – north, south, east, and west. Do not miss What Do We Need To Know About Data Centre Investments?
Real estate investment sectors to put your bucks in
While residential real estate has an emotional component, and sales in the sector have expanded significantly, with many top developers demonstrating excellent sales,’ commercial real estate has done better in the previous decade and will continue to grow. Warehousing and data centers are two more emerging real estate classes. Warehousing is experiencing a large growth in demand, and a lot more investment is happening there, and data centers will see additional investment in the next 3-5 years. Another area to keep an eye out for is co-living or student housing. Do not miss Co-living Spaces- A Coming Age of Real Estate Investment.
While you may invest in core and developing classes, data centers and warehousing have a reasonably strong story that we can see playing out over the next 5-6 years. In terms of returns, residential real estate may anticipate high single-digit or low double-digit growth, as opposed to stock investments, which might expect 12-15 percent returns over a lengthy time. Meanwhile, commercial real estate yields roughly 8-10% and is an asset type that provides inflation-adjusted returns.
Assetmonk is a prominent real estate platform that provides 14-21% IRR investment opportunities in important Indian cities including Bangalore, Chennai, and Hyderabad. After doing comprehensive due research, Assetmonk presents high-quality commercial investment possibilities. Our ambitious co-living project, ‘The Landing,’ is about to take flight, and we are excited to communicate with investors that the initiative is already a success due to the overwhelming response. Come meet us and invest with us.