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What Are the Real Estate Investment Opportunities In India

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What Are the Real Estate Investment Opportunities In India

The real estate market is expected to grow exponentially in the coming years. According to the ministry of housing and urban affairs, the Indian real estate market will reach USD 1 trilling by 2030.

In India, the real estate market is expected to reach USD 1 trillion by 2030.  All the four important pillars of the real estate market namely residential, commercial, retail, and hospitality have significant growth potential for the upcoming years.

So, Let’s understand which are the different real estate investment opportunities In India. And why investing in the real estate market is a good investment option.

Here Are The Major Real Estate Investment Options In India: 

  • Residential Properties
  • Commercial Properties
    • Office Spaces
    • Retail
    • WareHouses
    • Hospitality

Residential Properties:

There is increasing demand for residential properties in India. The primary reason for this is the growing urbanization and the active participation of the government in creating affordable housing.  India is one of the top 10 countries with an appreciating residential property market. This increasing growth trend in residential properties has been the encouraging factor for real estate investment in residential properties.

Following are the two main options for getting the returns from the investment in residential properties.

  1. Buying a residential property and then selling on the appreciation.
  2. Renting out the property for continuous incomes in the form of monthly rents.

For both these types of investments in residential properties, you need to consider certain essential factors. As the strategic investment favors the re-selling as well as property renting options. Therefore, considering the factors such as development, locality, livability, and price trends can give a better Return On Investment.

Another benefit in investing in Residential properties is having low interest rates and tax rebates which gives considerable relaxation to the investors.

Commercial Properties:

Growth of the Manufacturing, Textile, Banking and Finance, IT sectors have been prime movers of the commercial real estate sector.

There have been two major trends noted in indian commercial segment. First, the MNCs have been interested in setting up their offices in India for a number of benefits they get from the policies. And second, there is commercial space demand in tier II and tier III cities.

The investment in commercial properties gives better returns as compared to residential properties. Provided that all the key real estate ecosystem factors are considered carefully.

Following are the types of Commercial Properties For real Estate Investment:

  • Office Spaces
  • Retail
  • Warehouses
  • Hospitality 

Office Spaces:

The office spaces have 71% of the share in the total private equity investment in the real estate sector. This clearly highlights the significance of real estate investment in office spaces.

The office market has got the thrust primarily from the IT, Manufacturing, Finance, and BFSI sectors. Bangalore, Mumbai, Delhi NCR, Chennai, Pune, Hyderabad, Kolkata are the cities with the higher demand for office spaces. Among these main cities, Bangalore ranks first in the net absorption of office spaces.

Investors can invest in commercial properties and resale them when the market is up. Also, They can lease the commercial properties for continuous cash flows. However, commercial properties always need careful maintenance.  The ROI in the office spaces investment depends on how effectively the investor is able to maintain the property. 

Retail:

Because of the booming consumerism in India, there is high demand for retail spaces. This means there is significant scope for the growth in the retail commercial properties In India.

The retail sector has an annual growth of 25-30%. The international retailers have forayed into the positive Indian retail market. Mumbai, Kolkata, NCR, Bangalore are the leading cities on the retail landscape.

Experts are projecting positive growth in the Retail real estate market for the upcoming years. Around 39 million square feet will be added by the retail market by the year 2022.

Returns for the real estate market can be impressive if there is careful consideration of the locality and the maintenance of the retail property.

WareHouses:

Increased demand for eCommerce and the new Manufacturing units have triggered the demand for the warehouses. In 2020, the private equity investment in the Warehouse was USD 91 million in 2020. The total share of warehouse investment in real estate was noted to be 7% in 2020.

Delhi, Mumbai, Pune, Chennai, Kolkata, Bangalore, Ahmedabad, and Hyderabad are some of the major Warehousing Cities. The regions with the presence of the eCommerce and manufacturing industries have greater demand for warehousing spaces.

The biggest challenge in warehousing investment is the requirement of higher financial demand and comparatively longer investment horizons.

Hospitality:

Restaurants, amusement parks, entertainment zones come under hospitality real estate. Since India has a robust tourism industry, there is significant demand for hospitality spaces.

Real estate investment for the hospitality industry spaces gives higher ROIs. This is valid if all the important factors of the real estate ecosystem are accurately considered.

Mumbai and Delhi NCR attract most of the hospitality industry spaces. Bengaluru, Chennai, and Hyderabad also have considerable requirements for hospitality spaces.

Investing in the hospitality spaces gives two key benefits- first, it has been global outreach; and second, it has a higher floor space index. Moreover, the policies have been framed by the government to boost tourism in tier I and tier-II cities. Therefore, real estate investment in hospitality spaces is a great option.

Summing Up:

The Indian real estate market provides impressive investment opportunities. Investing in the residential market gives flexibility as well as good returns to the investors. On the other, investment in commercial real estate properties such as office spaces, retail, warehouses and hospitality are known for their higher returns. Both for residential and commercial real estate sectors, a positive growth trend is expected.

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