Now is the time to invest in real estate, experts say – The New Indian Express


Express news service

NEW DELHI: Low interest rates and incentives offered by state governments and real estate developers helped the Covid-hit real estate sector rebound from lows in the first foreclosure when quarterly sales (T1FY22) fell by more than 90% year on year.

As for the buyers who can afford it, the crisis has become a good opportunity to modernize in a larger space or to diversify their investment portfolio by buying real estate at very affordable prices.

With supply slowing in the face of growing demand, sharply rising commodity prices and rising interest rates around the corner, industry players believe the current times are right to invest in the market. residential real estate.

“Now is the right time to buy real estate, especially for end users looking to buy their first home or move to a bigger home. Real estate prices are favorable, mortgage interest rates have been low for decades, there are many options available in ready-to-move-in properties and under construction, ”said Saransh Trehan, Managing Director of the Trehan Group.

Anuj Puri, chairman of real estate consultant Anarock Group, also believes that it is indeed a good time to buy a property, especially those seeking self-use, as going interest rates are at an all-time low. The decade, the affordability of homes is the best ever and developers continue to distribute various offers and discounts on many residential projects.

Currently, most banks offer home loans with a starting interest rate of 6.60-6.70%.

Rising prices are inevitable

According to Puri, given the continued rise in the cost of inputs to basic raw materials like cement and steel, developers are now considering raising prices.

Already in some residential projects, prices have increased by up to 10%, he adds.

The recently released Quarterly Housing Price Index (HPI) by the Reserve Bank of India, which is based on transaction-level data received from housing registration authorities in ten major cities, found that the IPH across India grew 2.6% (year-on-year) in the second quarter of 2021. -22 compared to 2% growth in the previous quarter.

Trehan says rising input costs are eating away at developer margins, which are already very slim.

“Over the past two years, input costs have increased by almost 20% and developers are reluctant to pass this increase on to homebuyers. A 10-15% increase in the cost of real estate is inevitable, ”he added.

According to industry participants, the cost of building materials, especially cement and steel, has increased by 40-50% and shows no signs of slowing down.

Puri adds that over the past year (amid offers and discounts), many developers have seen their stock drain after the housing demand soar during the pandemic, giving them the leverage to increase prices.

Request to drive the return

The recent publication of real estate consultant CBRE, India Market Monitor Q3 2021, highlighted that with an attractive and sustained mortgage regime and government incentives, home sales jumped almost 46% QoQ to 50,000 units in Q3 2021 and have rebounded significantly by around 86% year-on-year to date. (YTD) base.

Therefore, despite the disruption and turmoil in the market during the pandemic, the residential sector has shown resilience – with bright prospects.

According to market participants, the expected high demand can generate a noticeable return on investment in real estate, as real estate prices are only expected to rise.

Known for its low yields, this sector has long been an area of ​​weakness among investors.

Puri explains, “If we look at current trends, for anyone who invests 1 crore in a prime location in one of the major cities, they can see at least the average. 25-30% overall return on investment over the next five years. The rate of return is likely to be over 50% in 10 years. However, a lot depends on the type of property, its location, the type of builder, etc.

This return, however, is likely to be much lower than investing in blue chip stocks, another safe investment area. In the current bull run, the benchmarks – Nifty and Sensex – have returned 29% in just one year!

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