Top Reasons to Invest in Residential Real Estate in India
With its unwavering performance and stability, residential real estate in India has emerged as a resilient and dependable investment option in the ever-changing landscape of investment opportunities.
This sector offers consistent returns and sustained value appreciation despite market fluctuations and economic uncertainties.
This article looks at the enduring impact of residential real estate as a sound investment choice in India.
What is Residential Real Estate?
Residential real estate in India encompasses properties primarily used for residential purposes, catering to the housing needs of individuals and families. The main types include:
- Apartments: Multi-story buildings with individual housing units, commonly found in urban areas.
- Independent Houses (Bungalows): Standalone homes offering more privacy and space, typically located in suburban areas.
- Villas: Luxurious standalone residences, often part of gated communities with amenities such as private gardens and pools.
- Row Houses: Connected homes sharing side walls, combining features of apartments and independent houses.
- Plots: Parcels of land for individuals to build custom homes.
- Gated Communities: Residential complexes with controlled access, providing enhanced security and shared amenities.
Residential real estate serves as primary living spaces, offering everyday living, and recreational facilities, and fostering a sense of community.
Why You Should Invest in Residential Real Estate?
Here are the top reasons to invest in residential real estate.
Stability Amid Economic Fluctuations
Despite economic fluctuations, the Indian residential real estate sector has demonstrated remarkable stability and significant growth potential.
Its consistent outperformance of other investment options underscores its resilience and long-term viability.
The sector’s impressive performance in recent years reflects a notable shift in consumer preference towards homeownership rather than rental arrangements, leading to a thriving real estate market that continually sets new benchmarks and exceeds expectations.
Government Initiatives and Policy Support
The Indian government has played a crucial role in strengthening the real estate sector, particularly in the housing segment. Initiatives such as the Pradhan Mantri Awas Yojana (PMAY) have provided significant momentum for individuals seeking to construct or purchase their first homes.
Over the past decade, PMAY has facilitated the completion of 4.21 crore houses for eligible low-income families.
To address the escalating housing needs of eligible families, the newly formed government, in its first cabinet meeting, has pledged to support an additional three crore rural and urban households with house construction.
Attracting Substantial Investments
These efforts have not only stimulated the residential real estate market but also drawn significant investments.
In the first quarter of 2024, the Indian real estate sector garnered a total of USD 1.1 billion in investments, with the residential sector taking the lead by securing nearly USD 693 million.
This underscores the residential sector as the top performer among various asset classes, fuelled by strong housing demand and a renewed supply over the past few quarters.
Infrastructure Growth Creating New Micro Markets
The real estate market is significantly influenced by infrastructure development.
The Indian government has prioritized infrastructure development by allocating a substantial ₹13.7 lakh crore, representing 4.5% of GDP, for capital expenditure. This demonstrates the government’s strong commitment to establishing a solid groundwork for growth, propelling India towards achieving a $5 trillion economy.
A considerable portion of this investment is allocated to the railway sector, highlighting the importance of strategic intermodal connectivity, including roads, railways, ports, and airports.
Enhancements in roads, public transportation, and facilities are transforming previously inaccessible areas into attractive opportunities for real estate investment
Promising Market Trends
The residential real estate market has been experiencing a robust recovery, making a significant contribution to India’s growth trajectory. The industry is anticipated to witness a 15-25% surge in new property launches in 2024.
Furthermore, sales are expected to register a 10-15% improvement, crucial for the sustained advancement of the real estate market. In 2024, residential properties in Mumbai are projected to appreciate by 5-8%, with a notable uptick in the demand for luxury and mid-segment properties.
As per CREDAI, sales volume surged by 35% in 2024, with luxury segment sales witnessing a remarkable 50% increase. Fuelled by exceptional sales momentum and a flourishing luxury segment, developers are actively exploring the creation of appealing real estate investment opportunities for both investors and end users.
A Secure and Promising Investment
Residential real estate has cemented its position as a cornerstone of stability and dependability. The influx of investment into the residential market in Q1 2024 is double the quarterly average recorded over the past eight quarters, indicating a substantial upsurge in investor confidence and interest.
This trend underscores the crucial role of the sector in propelling overall real estate investment in India.
This momentum is bolstered by a stable economy, favourable interest rates, and a shift in consumer perception, with property ownership increasingly perceived as a reliable financial safety net.
As the market is set for consistent growth in 2024, residential properties are experiencing a significant surge in demand. India’s property markets are displaying strong growth, marked by a substantial increase in new launches and a notable uptick in sales.
The Indian real estate sector is showing strong potential for sustained and robust growth, driven by factors like rapid urbanization and supportive government initiatives. With expected annual growth of 15-20%, real estate investments offer a secure and promising future.
Residential real estate in India stands out as a stable and reliable investment option, consistently outperforming other choices and attracting significant investments.
As the market continues to evolve and grow, residential real estate remains one of the safest and most rewarding investment options in the country.
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