A smart investment can change the life of an investor and their entire family. The era of relying solely on a single source of income and traditional savings for financial independence is now gone.
A contemporary investment portfolio can include a variety of assets, including stocks, bonds, mutual funds, etc. But despite the popularity of these assets, residential real estate continues to be the most popular investment option for a typical Indian.
Acquiring a new home is a cherished aspiration for Indian households. Apart from bringing emotional satisfaction, it promises financial growth with a commendable return on investment (ROI). This article explores some key advantages that make residential investment a compelling option for millions of Indians.
Steady Appreciation of Residential Property Values
One of the primary reasons to invest in residential real estate is the steady appreciation of property values over time. Factors such as the continuously growing population of India and urbanisation have led to an increased demand for housing properties, pushing their prices up.
The consistent appreciation in the values of residential properties allows potential real estate investors to make substantial long-term gains.
Historically, real estate investments have provided steady and better returns than most fixed-income generating instruments, such as Fixed Deposits, Public Provident Fund (PPF), etc.
Entails Lower Risk than Equity Investments
Another reason to invest in real estate is the lower associated risks as compared to equity instruments. Property prices are not as volatile as stocks or mutual funds. It means that even risk-averse investors can invest in residential real estate without worrying about the safety of their capital.
Investing in real estate can also help an investor diversify their investment portfolio. Diversification is crucial in investing as it helps an investor mitigate the risk of losses when an asset fails to perform as per the expectations.
A Potential for Steady Rental Income
Investing in residential real estate has the potential to generate a steady rental income for the investor. With a growing population and increasing migration to urban areas, the rent for housing properties tends to increase over time. By investing in a flat or apartment at a prime location, one can generate significant rental income for a lifetime.
It can be especially helpful for those looking to invest for their retirement. A regular stream of income from their residential investment can help them meet their financial requirements during the golden years.
A Gamut of Tax Benefits and Incentives
The Government of India encourages investors to invest in residential properties, and hence, offers a gamut of tax benefits and incentives for the same. For example, by making a real estate investment in a housing property, one can avail of a tax deduction of up to ₹1.5 lakhs under section 80C of the Income Tax Act of 1961.
Additionally, suppose an investor has taken a home loan to invest in a residential property. In that case, they can avail of an additional tax deduction of up to ₹2 lakhs under section 24 of the same Act.
These tax deductions can significantly reduce the cost of investment, and subsequently, boost the rate of return. Specific government programs such as the Pradhan Mantri Awas Yojana (PMAY) and the Real Estate Regulation and Development Act (RERA) have also made real estate properties attractive for investment.
Emerging Trends and Opportunities in the Residential Real Estate Market
The increasing use of technology and the need for luxury and convenience have given rise to several emerging trends and opportunities in the residential real estate market. For example, contemporary builders are developing smart studio homes to cater to the precise housing requirements of urban couples and small families.
In India, numerous newly developed housing units are equipped specifically with features such as centralised air conditioning systems, voice-activated assistants, smart electronic appliances, and automated security systems. Additionally, they offer amenities such as landscape gardens, solar panels, rainwater collection systems, etc.
All these developments have made the Indian residential real estate industry a lucrative proposition in the eyes of domestic and foreign investors.
To Conclude
Investing in residential real estate in India offers a range of potential advantages, from steady capital appreciation and rental income to portfolio diversification and tax benefits. However, as an investor, one must conduct thorough research and careful analysis of various factors such as location, transportation, amenities, etc., before investing in a property.
Piramal Realty offers some of the best real estate investment opportunities in Mumbai and Thane. With over a decade of experience in the industry, they provide luxury homes that exude class and comfort. Click here to take e-tours of their latest developments.
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