Real estate is a significant investment that can deplete years of savings. The sector, which was already struggling in most parts of the country, came to a halt as a result of the lockdown. Things began to improve in July, when the unlocking process began.
The question that everyone wants answered, however, is “Is this the right time to buy property?” While some of the excitement may be due to pent-up demand and discounts, residential real estate demand is expected to rise steadily in 2021 as well.
Based on the sector’s performance over the last two quarters, recovery will continue, and the sector should be back to pre-Covid levels in the coming quarters.
Regional Break-up
The country’s recovery has not been consistent. Affordable housing will dominate the market, and cities such as Hyderabad, Bangalore, Delhi-NCR, Mumbai, and Pune will see a drop in inventory as stable prices and low-interest rates drive sales. However, peripheral markets will perform better because they offer units that match most buyers’ budgets and desired unit size.
Best Time To Invest
While rental yields have remained stable, the drop in interest rates on deposits has made them more appealing. The gap between rental yields (3% vs. 7%) and interest rates (7% vs. 7%) has shrunk dramatically. Property appears attractive even with a marginal increase of 3-4 percent. Furthermore, tax breaks on home loan interest and principal reduce the cost of a loan to less than 5% for people in higher-income tax brackets.
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The Alternatives
If you have a high risk tolerance and want to invest in commercial real estate, you must be very selective. Even during the pandemic, Grade ‘A’ assets maintained rental collections of more than 90%. We believe that net absorption in commercial office space will increase in 2021, with rents stabilising.
REITs have also emerged as a viable option for reaping the benefits of real estate investment while spending less money. “During the pandemic, both listed REITs in India saw strong rental collections of more than 97 percent,”
