It is, in fact, good news to the real estate sector that HNIs (High Net worth Individuals) have started moving from the equity market to real estate and debt. The reason being the volatility in the equity market and an increase in the interest rate in the country, made this reallocation to asset classes such as real estate and debts. The government has taken the necessary steps to enhance transparency and credibility in the real estate sector to provide an attractive alternative for HNIs to invest.
When considering the real estate sector, the residential property sector as well as commercial sector has been experiencing an increase in the property price appreciation in the top cities leading the ultra-rich investors to concentrate their investment in real estate. The sprouting IT sector and corporations have increased the demand for commercial and residential space availability in main cities like Bangalore, Pune, and Hyderabad. This has made the shift of HNI investors to invest in villa projects in Bangalore and high- yield commercial real estate sector. Institutional investors and large corporations are confident to invest in India as they are aware of the fact that the real estate sector will be the leader in the industry in terms of investment and returns in the upcoming years.
Reasons behind Real Estate Investment
High Demand for commercial space: CBRE’s survey report states that 80% of Indian companies, in the IT sector, logistics, manufacturing, and BPOs, will hire more employees in the coming years. This will increase the demand for office space and nearby residential real estate. Also, the new office space tenants are likely to follow suits that will add more volume to the requirement of office space in the coming years.
High Rental Income: In India, many multinational companies have plans to expand their business. Hence the high demand for office space. The HNI investors in Hyderabad, Pune, and Gurgaon are expected to benefit from a 5-10% hike in lease rentals in these cities. Also, innovative office spaces that can be transformed into technically sound offices will charge higher rent going forward.
Favourable policies by the government: Central Government’s initiatives like Make in India, Skill India, relaxed foreign direct investment norms, uniform taxation through GST, execution of RERA norms have led to the commercial investment growth in metro cities like Bangalore, Mumbai, Pune, Chennai, and Hyderabad. Construction of new office spaces will step up with favourable and better regulatory norms in India in the years to come.
Capital Realization: The IT industry on the edges of metro cities is the promising prospects in terms of capital realization, fair source of income, reliable tenants, and longer lease incumbency.
Best Cities for Real Estate Investment
India is showcasing a higher return on investment compared to any other country in the real estate sector. This grows the HNIs interest to invest in metro cities like Bangalore, Mumbai, Pune, Hyderabad, and Delhi. Among these Bangalore tops the list of cities and is considered as the hotspot for HNI investment. Whitefield, a well-established corporate hub in Bangalore opens the door to great re-employment opportunities in the city. This has led to growing demands for apartments and luxurious villa projects in Whitefield. With lucrative loan facilities offered by financial ventures, there is a steady rise in real estate projects by HNI investors in Bangalore. It is popular for its well established and outstanding infrastructure. The fundamental rule of any commercial or residential investment is the ‘location’. Employment opportunities drive the demands for both sectors. The existence of commercial office space generates the demand for the residential sector for the employee’s survival. Every year, Bangalore welcomes at least one lakh employees that have led to the real estate growth in this city.
Experts say Indian real estate is in the growing stage. It has a bright future. Real estate will give you a stable return only if you stick to it. This cannot be lost or stolen. If purchased wisely, paid for in completely and managed sensibly, this is the safest investment in the whole world.