Investing in Indian real estate: Still a safe haven
Real estate boom on the rocks
Real estate in India is a sector which has grown by leaps and bounds in the last couple of decades. Indian real estate is considered ideal for investment purpose. Real estate sector has been witnessing rapid growth in major Indian cities with the high rises and malls adorning the cityscapes.
However, the feverishly growing real estate has been affected by sluggish sales and even the government is concerned about the state of realty in the last few quarters. At a time when the real estate is battling issues like lack of price correction, cumbersome approval procedure leading to project delays and most of the developers find themselves in a cash crunch, investors are bound to be apprehensive of investing in the sector.
Good times ahead
However, real estate analysts have predicted that there is no need to worry about the bubble burst and that real estate still remains a safe bet for investing your precious wealth. Knight Frank, a renowned realty advisory firm, have come up with a study that says the real estate investors can expect a possible return on investments ranging between 18.6 percent and 29 percent per annum over the next five years.
Indian real estate sector has been much speculated upon after reports of high number of unsold houding units in realty hubs like Mumbai. However, Knight Frank’s report says that despite the slump in the real estate market, Mumbai will continue to be the most promising investment destination followed by Delhi-NCR, Chennai, Pune and Bangalore.
13 destinations across the five cities of Mumbai, Delhi-NCR, Chennai, Bangalore and Pune have been identified in the report as the real estate hotspots. Prices are expected to appreciate in the range of 91-145 percent over the next five years in these locations. Akin to the recent past, residential real estate will emerge as promising asset class for investors during the stated period. As for the industry influences on real estate, performance of IT/ITeS firms will be crucial in the cities of Bangalore, Chennai and Pune.
Realty hotspots
Regarding specific locations, Ulwe, Wadala and Chembur in Mumbai are expected to witness price appreciation of 145 percent, 133 percent and 125 percent respectively in five years, places ensuring the highest returns.
DElhi-NCR has been the scene of real estate burst in the past few years with enormous amount of housing projects coming up in Noida and Gurgaon. The northern pocket shows spectacular correlation between infrastructural development and real estate boom as Noida Extension and Dwarka Expressway are expected to bring in 111 percent and 108 percent respectively over the period.
South Indian real estate market is deemed stable as compared to its counterparts of Delhi and Mumbai. Medavakkam and Pallikarni are being identified as the most profitable locality in Chennai. Medavakkam property prices are expected to rise by a whopping 103 percent, whereas Pallikarni will see an appreciation of 93 per cent.
Pune is a city where real estate development has entered the rapid growth stage. Hinjewadi, Tathawade, Ravet and Wakad would witness rise in prices by 100 percent, 98 percent, 97 percent and 91 percent respectively mainly due to the IT and ITeS sectors.
Bangalore real estate market is characterized by steady growth added with reasonable pricing as compared to other metros. Bangalore realty is expanding rapidly towards the outskirts. The Namma Metro connectivity will have a massive impact upon Bangalore’s real estate in the next five years. Hebbal and KR Puram are the areas identified who would be witnessing highest price appreciation. While Hebbal will witness 94 percent price rise, KR Puram property will appreciate by 91 percent.
