Advantages of Real Estate Investment

Investing in a profitable and safe niche is difficult due to the volatile market conditions, global concerns, and many other reasons. However, the real estate investment benefits are plentiful as it is regarded as one of the most secure and beneficial investment options in the world and India is no exception.

In India, real estate has evolved into a lucrative arena of opportunities to create wealth due to its tremendous potential. Those looking for investment options must consider the benefits of investing in real estate, which will be discussed here.

What is Real Estate Investment?

Real estate investment means purchasing a property or multiple properties not intended for end use Rather, these properties are bought to generate income from rent and attain profits through appreciation of the value. Apart from providing income, tax benefits of real estate investing are also the lucrative part.

Top Real Estate Investment Benefits

• Growth

As per statistics, India’s real estate sector is expected to reach $1 trillion by 2030 from $200 billion in 2021. In the financial year 2023, the volume of residential property sales saw a growth of 36% with 3,79,095 units sold.

Mumbai ranked first among the top 7 cities in 2023, recording the highest sale flats. Total 1.5 lakh house units were sold in Mumbai. There was also an increase in the new launches by 25%. These figures indicate a continuous growth pattern in real estate which can be highly beneficial for investors in the future.

• Value Appreciation

The trend in real estate has always seen an upward graph and continues to grow every year. Those investing in real estate can expect higher returns when selling the property in the future. Besides, there is an increase in the rental every year which is another appreciation of one’s wealth.

• Provides Diversification of Portfolio

Indian real estate is one of the safest investment options as compared to stocks and others. It appeals to a wide range of investors, both Indian and NRIs. Diversifying money in real estate saves one from suffering from a complete loss in case the other investments fail.

• Provides Multiple Options

Those looking for real estate investment opportunities have various options to choose from. One can choose to invest in residential property, commercial spaces, house flipping, and real estate investment trusts (REITs). The benefits of REITS are that it allows an investor to invest in income-generating properties without owning them.

• The Leverage Option

If one buys a property with the help of a home loan, it allows them to own a property without having to pay for it completely outright. For instance, with 20% of the down payment on mortgage one owns the property 100%.

• Keeps the Investor Protected from Inflation

Among the pros of investing in real estate is protection against inflation. As inflation increases, the prices of commodities go up. However, the rental income and property value also rise, helping to maintain the investors purchasing power.

Tax Benefits of Real Estate Investing

Among the advantages of real estate investment is the tax relief and benefits that investors can enjoy. Those purchasing a property with the help of a home loan can save up to ₹1,50,000 per annum on the principal amount under section 80 C of the Income Tax Act.

Under Section 24, one can claim an interest deduction of ₹2,00,000 per annum which is also among the tax deductions for real estate investors.

Things to Consider While Investing in Real Estate

Apart from the benefits of real estate investment deductions, high income, inflation protection, etc., one must also consider some factors when thinking of investing in real estate.

• The purpose of investment
• Location of the property
• The legacy of the developer
• Legal aspects and litigations of the property
• Authenticity of property papers
• Investing at an early age for enhanced benefits

Real Vs Other Investments

New investors must know how real estate compares to other investments and provides benefits in the long run:

1. Stock

The performance of stock completely depends on market fluctuations, making it more volatile than real estate. It also requires investors to invest the amount upfront.

2. Mutual Funds

Mutual funds are tied to stock markets and require a lump sum amount to be invested in one go, which is not the case in real estate.

3. Bonds

Bonds also need upfront investment. Though they are less risky than the stock market, they offer lower returns as compared to real estate investments.

Conclusion

To wrap up, it is evident that real estate in India is a preferred and beneficial investment option as it offers good returns, has steady growth, protects one from inflation burn, and so on. The Indian real estate market is thriving and is filled with tremendous prospects for growth in the future.