Real estate is one of the most significant investments which consumes years of savings. The sector, already struggling in most parts of the country, was brought to a grinding halt due to the lockdown. Things improved from July when the unlock process began.
However, the question which everyone wants an answer to is: Is this the right time to buy property? "While some of the excitement may be on account of pent-up demand and discounts, demand for residential real estate is expected to increase steadily in 2021 as well," says Sharad Mittal, CEO, Motilal Oswal Real Estate.
"Going by the sector's performance in the last two quarters, recovery will continue, and the sector should be at pre-Covid levels over the next couple of quarters" says Kanika Gupta Shori, COO, Square Yards.
The recovery has not been even across the country. "The affordable housing segment will top the charts and cities like Hyderabad, Bangalore, Delhi-NCR, Mumbai and Pune will witness a fall in inventory as stable prices and low interest rates drive sales. However, peripheral markets will perform better as they offer units that tally with the budget and desired unit size of most buyers," says Gupta of Square Yards.
Best Time To Invest
While rental yields have remained intact, the fall in interest rate on deposits is making them more attractive. Mittal says the difference between rental yields (3 per cent) and interest rates (7 per cent) has become very narrow. Even with a marginal appreciation of 3-4 per cent, property appears attractive. Moreover, tax benefit on home loan interest and principal bring down the cost of a loan below 5 per cent for people in higher-income tax brackets.
"While end-users shouldn't try to time the real estate market, property prices are at their lowest best. Buying now equals buying at the lowest possible price," says Prashant Thakur, Director & Head, Research, ANAROCK Property Consultants.
If you have a higher risk appetite and are looking to invest in commercial real estate, you need to be very selective. "Grade 'A' assets have remained resilient even during the pandemic with more than 90 per cent rental collections. As we head close to a vaccine being finalised for production and distribution in India, we feel that the commercial office space will see growth in net absorption with rents being stabilised in 2021," says Mittal of Motilal Oswal Real Estate.
REIT has also emerged a good option to get the benefit of real estate investing with lesser money. "Both the listed REITs in India have seen strong rental collections of over 97 per cent during the pandemic," says Mittal of Motilal Oswal Real Estate.
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