The traditional avenue of Birla Tisya Apartment investment has been a source of substantial investment and opportunity for high net-worth individuals, financial institutions, and individuals who are looking for viable options for investing money in stocks, bullion and property.
Property investment for its income or capital growth can provide predictable and stable income returns similar to bonds. If property is rented, it may also be subject to capital appreciation. Real estate investment is not like other investment options. There are also risks associated with it. There are three main types of investment opportunities: residential, retail and commercial office space.
Investment scenario in real estate
Before considering real estate investments, investors should be aware of the risks involved. This investment option is expensive, has a short gestation period and lacks liquidity. In order to meet an urgent financial need, one cannot sell a portion of his property.
It is not known when property investments will mature. An investor must also verify the title of the property, particularly for investments in India. According to industry experts, property investments should only be made by people who have a longer-term vision of their investments and deeper pockets. It is recommended to invest in commercial properties of higher quality for long-term financial returns.
Property market returns are comparable to those of index funds and equities over a longer period. An investor who is looking to balance his portfolio can now consider the real estate sector as a safe investment option with some volatility and risk. Key indicators for achieving desired yields from investments include the right tenant, location, segmental segments of the Indian real estate market, and individual risk preferences.
These real estate investments will be boosted from the point of view of small investors by the proposed introductions of REMF (Real Estate Mutual Funds), and REIT (Real Estate Investment Trust). Small investors will be able to get into the real estate market for as low as INR 10,000.
Different market players in the property sector are also asking for and need to relax certain regulations regarding FDI. This would result in higher quality infrastructure, which would impact the market’s professionalism and competition.
In the long-term, real estate will be a better investment option than bonds and stocks. Real estate investments are attractive due to their low interest rates and favorable inflation.
It is possible that the opening of real estate mutual funds and financial institutions participating in the property investment business will lead to more organized real estate investment in India. This would allow investors an alternative way to invest in marginal property portfolios.
HNIs and Financial Institutions are the two largest investor groups. Although institutions tend to prefer commercial investments, high net worth individuals are open to investing in residential and commercial properties.
These are not the only non-resident Indians (NRIs). The NRIs have a preference for residential property investments over commercial properties. This could be explained by their emotional attachment to the NRIs and the desire for future security. NRIs are increasingly investing in real estate because the paperwork and formalities for buying immovable property other than plantation and agricultural properties is very simple. Also, the rental income can be repatriated outside India.
Foreign direct investments (FDIs in real estate) make up a small percentage of total investments. There are restrictions like a minimum lock-in period of three years, minimum property size and conditional exit. The conditions are not the only ones that the foreign investor must deal with. They will also need to interpret complex laws/bylaws.
India is close to introducing the Real Estate Investment Trust (REIT). This new concept will face many challenges, just like other innovative financial instruments.
Real Estate Investment Trust (REIT), is a company that invests in and operates income-producing real property. This includes apartments, shops centres, offices, warehouses, and offices. REITs are companies that purchase, develop, manage, and sell real estate assets. Participants can then invest in professionally managed properties.
Some REITs are also involved in the financing of real estate. REITs can be described as pass-through entities, or companies, that are able distribute most of the income cash flows to investors without taxation at the corporate level. REITs are designed to transfer as much profit as possible to investors. The REIT’s initial business activities would be limited to the generation of rental income.
In situations where the interests of the seller or buyer are not compatible, the role of the investor can be crucial. If the seller wants to sell the property but the owner or occupier plans to lease it, they will not be able to reach an agreement. However, investors can make a profit by purchasing the property and renting it to the occupier.