Advantages of Real Estate Investing in India

Top 6 Benefits of Investing in Real Estate in India

Investing in real estate in India offers numerous benefits, making it a great choice for investors. Wondering why invest in real estate? It gives you a reliable asset that increases in value over time, helping you build wealth in the long run. So, let's look at the benefits in detail :

1. Steady Rental Income
One of the most significant advantages of real estate investing in India is the high possibility of earning a steady rental income. As India continues to urbanise, migration to cities has increased tremendously, creating a massive demand for rental housing.

With high property prices in metro cities, most migrants prefer rental properties. For residential properties, rental yields can range between 2.5% to 3.5% annually. However, commercial properties can offer significantly higher returns, with rental yields often exceeding 6% to 8% annually, depending on the location and type of property.

Even in non-metro cities, both residential and commercial properties can provide a substantial annual rental yield, making them attractive investment options. As per the conditions you set for the rental agreement, you can expect a fixed inflation-adjusted income on a monthly or quarterly basis.

Also Read: The benefits of investing in affordable housing

2. Diversification of Portfolio
Investing a part of your portfolio in real estate can help you diversify from traditional asset classes like equities, fixed-income debt, and gold and balance your portfolio's overall risk profile.

While the other asset classes are exposed to stock market volatility and interest rate risks, real estate market values tend to be more stable in the longer term. Prices may fluctuate in the short term but have shown a rising trend historically. Thus, one of the biggest advantages of investing in real estate is the ability to counter the volatility in the rest of the portfolio over the longer term.

3. Encashing the Commercial Real Estate Wave in India
India's technology sector is rapidly expanding, particularly in cities like Bangalore, Hyderabad, and Pune. With the rise of technology companies and increasing job opportunities, the demand for office spaces and warehouses is on the rise, driven significantly by the growth of e-commerce.

This surge in demand makes commercial real estate a promising investment opportunity. High rental yields in these tech-driven cities make them attractive for investors seeking steady returns from their properties.

With more startups and remote work, demand for shared workspaces is also increasing. Investing in co-working spaces to rent out desks or offices can be a lucrative way to make money in commercial real estate. In short, India's booming technology and e-commerce sectors fuel commercial real estate's growth.

Also Read: Why is Real Estate Investment in India the Most Profitable Option?

4. Tax Benefits
There are various tax benefits available for real estate investments in India. For example, you get benefits under the different sections (24, 80C and 80EE) of the Income Tax Act. You can claim the principal and interest components of your home loan EMIs as deductions under section 24. Please note that you can only claim up to ₹ 2 lakh per annum.

One of the advantages of investing in real estate is claiming capital gains tax exemption under section 54 on selling residential property if you reinvest the gains. You get an exemption of ₹ 1.5 lakh under section 80C (from being included in your taxable income).

Furthermore, you can also claim an additional interest deduction of up to ₹ 50,000 on your home loans under section 80EE of the Income Tax Act.

5. Hedge Against Inflation Risk
Real estate investments in India have historically proven to be an effective hedge against inflationary risks compared to most other forms of investment. While inflation can significantly erode the value of your assets, financial experts suggest that real estate tends to provide capital appreciation that exceeds the inflation rate over extended periods.

So, rising real estate prices can help you overcome the loss in value due to inflation. Your investment in real estate ensures the protection of not just your invested capital but also its value in the real purchasing sense.

6. High Possibilities of Capital Appreciation
Owing to the rapid development of infrastructure and the growing demand for housing in India, capital appreciation of real estate assets has been high over the past few years.

Property prices have been increasing, especially in urban centres. This has created significant wealth for real estate investors.

Though past performance should not be trusted as a guarantee of future returns, several structural factors, such as government impetus through schemes like Smart Cities Mission and Housing for All, are likely to drive capital appreciation in the real estate sector in India.

Even if the price rise appears sluggish during specific periods, regular rental income can provide decent returns on your investment.

Also Read: How to Make Profits from Real Estate Investment?

Real estate investing provides multifaceted benefits like steady rental income, portfolio diversification, tax savings, a hedge against inflation, and significant capital appreciation over long periods.

With a prudent selection of location and type of property, proper entry, and holding period, you can optimise your returns on your real estate investment. Piramal Realty is one of the most trusted real estate brands committed to offering a gold standard in architectural design, quality, safety, and customer-centricity. Choose Piramal Realty as your trusted partner for real estate investing.

Disclaimer- This article is based on the information publicly available for general use as well as reference links mentioned herein. We do not claim any responsibility regarding the genuineness of the same. The information provided herein does not, and is not intended to, constitute legal advice; instead, it is for general informational purposes only. We expressly disclaim any liability, which may arise due to any decision taken by any person/s basis the article hereof. Readers should obtain separate advice with respect to any particular information provided herein.