Is Real Estate a better investment in 2022?

While there are multiple investment options you might be aware of, from Fixed Deposits, Post Office schemes, Bonds, Gold, Stock market to investments and funding on promising start-ups, Real Estate as an investment stands out as the most desirable option to almost every individual in India.

While house is considered one of the basic need and necessity of humans, there is also emotional connection for us Indians when it comes to home. We are all trying to secure our future, create an asset for our children and looking for the best options to multiply our savings and wealth. A close look at all of those aforementioned investments reveal that the lowest risk and the highest returns are with real estate investment in India.

Why Real Estate Investment in India is Safe?

Let’s consider this list;

• Banks? With increasing bank scams, it is no longer safe to park all your money in banks.

Banks pay very mere interest on your money deposited with them, while the same bank charges huge interests if you try to take a loan from them. Do you get that?

Say me now, Are banks helping you or You helping the banks?

• Gold? portable and easy to liquefy, but experts say that only 10% of your total investments must be in Gold.

Gold can be stolen, so it is not only a risky investment, but also one that puts gold owners’ life and limb in danger by making them vulnerable to loot and attack.

• Stocks? The stock market is unpredictable. Growth of stock value can be slow, time taking and it is heavily subject to market risks.

• Funding? Investing in start-ups is also a risky option, as research shows that recently 90% of start-ups fail, reducing seed investments are very evident. If money multiplication is your goal, then investment in start-ups is not your best bet.

Thus, if an informed choice is made, real estate investment is by far, the best option available to safeguard your hard-earned money, build your wealth, and secure your and your children’s future.

Read on to find out why you should invest in real estate right now. Go for the best real estate investments in your town.

Why You Should Invest in Real Estate in India & What Are the Benefits of Investing in Property?

There are compelling reasons why you should invest in real estate.

Real Estate is a High Growth Industry 

The Reserve Bank of India’s House Price Index, which tracks home prices in 10 Indian cities, shows that return from owning housing real estate has plunged dramatically. The average return from owning real estate over the last decade has been 11.6% per year.

According to Indian Brand Equity Foundation, which is a knowledge centre for global investors:

• Real estate market will grow to ₹ 65,000 crores (USD 9.30 billion) from ₹ 12,000 crores (USD 1.72 billion) in 2019.
• Housing sales reached 2.61 lakh units in 2019 across seven major cities.
• Real estate accounted for ₹ 43,780 crores (USD 6.26 billion) in investment in 2019.

So, it makes a great deal of fiscal and entrepreneurial sense to invest in real estate for beginners.

Second only to agriculture in terms of employment generation, real estate contributes as much as 8% to the nation’s GDP. By 2025, the real estate sector is anticipated to account for as much as 13% of the country’s GDP — powered in large part by office spaces (27% growth, year on year), followed by retail and warehousing.

Real Estate as in Union Budget 2021:

This government sees ‘Housing for All’ and affordable housing as priority areas, said Finance Minister (FM) Nirmala Sitharaman while presenting Union Budget 2021-22. Real estate sector had high expectation from the Budget 2021, especially post the Covid-19 pandemic.

• In order to incentivise home buyers and real estate developers, it is proposed to increase safe harbour limit from 10% to 20% for the specified primary sale of residential units.
• In the July 2019 Budget, the government provided an additional deduction of interest, amounting to ₹ 1.5 lakh, for loan taken to purchase an affordable house. The finance minister has announced the extension of the time limit to avail of benefits on purchase of affordable housing by one more year, to March 31, 2022.
• FM proposed to extend the eligibility of this deduction by one more year, to March 31, 2022. The additional deduction of ₹ 1.5 lakh shall therefore be available for loans taken up till March 31, 2022, for the purchase of an affordable house.
• This means, the deduction benefit of ₹ 1.5 lakhs under Section 80EEA will now be available for buyers who invest in an affordable housing project before March 2022. This provides relief for buyers who were seeking investment opportunities in a market where new launches have fallen, due to the pandemic and developers are focusing on clearing their existing stock. The government’s push towards Housing for All under the Pradhan Mantri Awas Yojana (PMAY) will only revive the real estate sector, which has witnessed a slowdown due to large-scale policy changes such as demonetisation, GST and the RERA.
• Further, to keep up the supply of affordable houses, FM proposed that affordable housing projects can avail a tax holiday for one more year – till March 31, 2022.
• Debt Financing of InVITs and REITs (Infrastructure Investment Trusts and Real Estate Investment Trusts) by Foreign Portfolio Investors will be enabled by making suitable amendments in the relevant legislation.
• In the previous Budget, the government had abolished the Dividend Distribution Tax (DDT) in order to incentivise investment. Dividend was made taxable in the hands of shareholders. Further, in a truly future-forward move, the FM provided stimulus to REITs and InvITs with the exemptions on TDS (tax deducted at source). This will make REITs and InvITs a more lucrative investment for the common man, and help bring more private participation and flow of funds into the real estate and infrastructure sector (I will be writing in detail about REITs soon).
• A total of 702 km of conventional metro is operational and another 1,016 km of metro and RRTS is under construction in 27 cities. More connectivity, more opportunities.

Real Estate Investment in India Has Tremendous Potential for Appreciation 

For ages, real estate has always been characterized by appreciation in the value of the property. And more so in recent times, with more and more international companies investing in India, real estate value has appreciated faster than ever. In the post-pandemic scenario, with international investors looking to shift their investment from China to India, it is all the more advantageous for real estate investors in India. There will be more jobs, more influx to various cities, and more people wanting to buy homes as they move to new cities. As such, with increasing demand, the prices of real estate will go up.

Even if you invest in a seemingly lower value property on the outskirts or in the suburbs, it can become a gold mine in the future with the appreciated property values!

Real Estate Investment in India Can Help You Get Rich Quick 

Property values can increase at exponential rates, and a good real estate investment can help you become rich quickly. If you take a look at well-to-do people around, you can see that the affluent people are generally the ones who inherited a substantial amount of property. A lot of ordinary people sold their lands and property after urbanization, and got rich overnight. Most of the world’s richest persons rely on real estate as a safe bet.

Tax Saving on Real Estate Investment in India under Various Sections 

For salaried people, investing in real estate in India can help you with significant savings on income tax. If you avail a home loan, you can get an IT rebate on the annual interest paid, a part of the principal loan amount, the stamp duty and registration charges, and other additional deductions under section 24, section 80C, 80EE etc.

Real Estate Investment in India is Low Risk with High Returns 

As mentioned earlier, real estate investment doesn’t carry the kind of risks associated with bank deposits or stock markets. In the bygone years, there used to be the fear of illegal occupation of unattended property by land usurpers, or the fear of unauthorized persons selling your property in a fraudulent manner. In the present times, with robust registration processes backed by video records, bio-metrics, and modern documents like Aadhar card, etc., it is impossible for fraudsters to illegally occupy or sell your properties. Moreover, properties today are safely lodged in gated communities and fenced boundaries. All these measures work to keep your real estate investment and your property safe in all ways.

BONUS: Why You Should Invest in Real Estate Right Now?

As it is evident, Now is the right time to invest in real estate in India.

• The softening of interest rates on home loans to around 6% to 7% and rock bottom housing prices coupled with attractive special offers from cash-starved land developers are positive factors that paves buyers’ return to the market. The country’s largest lender, State Bank of India (SBI) has sweetened the offers on Home Loans and now offers interest concession of up to 70 bps with interest rates starting from 6.70 percent onward. These rates will be available for a limited period ending on 31st March 2021. The lender is also giving a 100 per cent waiver on processing fees. The interest concession is based on the loan amount and CIBIL score of the borrower.

• The reverse migration, caused by the rise of the remote working culture, led to the emergence of heightened demand for homes in tier-2 and tier-3 cities, including rentals.

The increased investment in infrastructure development by governments and businesses, in developing tier-2 and tier-3 cities as centres of economic activity, along with increased consumer spending, will write the story of growth, employment and opportunities in the coming decades in India. While industry insiders are unanimous that tier-2 and tier-3 cities are going to witness a great deal of increased activity, some also point out that heightened activity is expected in metros like Bengaluru, Hyderabad, Mumbai, Pune and select parts of Gurgaon and Noida.

• Union Budget 2021 is supportive for developers and buyers.

You might be hearing a lot about real estate markets also being hit and affected among others due to the pandemic and that this is not the right time to invest in real estate, then by now you had probably be surprised to know that now is actually the right time to invest in real estate.

Real estate investment is the safest and most reliable. It results in high returns compared to any other form of investment. Any real estate purchase beyond your first one – a place that you call home – becomes an investment. It is more profitable than parking funds in banks or buying gold, as real estate value increases at exponential rates compared to bank interest or gold appreciation. Buying property is a sustainable form of investment for your retirement, and also for your children and future generations. While you could be proud of owning a land, your progeny will have a bright life and a secure future.

Currency is just an agreement – the currency bills themselves say “I promise to pay the bearer the sum of Rs. X”.

Bank balance is just data on the server.

Whereas real estate is real! It is tangible and permanent. Make no delay further, Go ahead and invest in the best real estate investments!