Top 7 Factors Influencing Growing Investor Preference for Real Estate

Gone are the days when savings or fixed deposits were the only common financial tools. Newer and better means of allocating financial resources have emerged. Reaping promising gains in investment was once possible only for a few experienced players but now, people are themselves taking a responsibility to invest strategically. They are exploring new ways to expand their portfolio to reap desirable returns. Real estate has always played a vital role for investors and has proven as a reliable asset investment. Many celebrated realtors belong to the one-of-the-richest gentry.

Property has always been considered a safe bet. While the common belief is that real estate is the way to secure your savings, a better outlook is to invest and grow the capital invested. This can be achieved through returns from rentals, appreciation of the property, profits incurred from businesses dependent on property and innovative REITs where profits can be earned without ownership of a property.

It is apparent that there is unending scope in real estate that is driving the demand for properties. But it is imperative to have a look through the reasons and analyse what has influenced this growth.

Economic Growth

As the economy of the country is growing at a steady pace the investors are optimistic about investing. Stable jobs and gaining national income have led to this shift in the trends. Real estate accounts for 13 per cent of the GDP and it is interesting to note the inclination that people have shown towards property ventures and how real estate is being a reliable source of investment amongst younger investors. It is validated by the recent H1 2022 survey where 59 per cent of respondents picked real estate as the best option.

Expanding Housing Sector

The housing and realty sector is growing at a tremendous rate. The demand for properties for residential and commercial rentals is increasing too. This has made people optimistic about investing in real estate. This was validated in the survey which found an increase of 5% among homebuyers compared to the last year. The survey showed the trends for the best asset class for investment pricing that the housing sector is now suitable for needs beyond consumption. The long-term investors have shown more enthusiasm.

Impact of Covid

The pandemic has drastically changed the understanding of the normal. The views people had for the real estate sector have turned around for the good. Within the span of two years, 2 per cent more people are looking to put their money in real estate from an investment perspective instead of for personal use. The lower home loan rates have also influenced more home investment during this time.

Millennials

A major increase in the number of homebuyers is owed to young investors. This also hints at the upward future trajectory of investment in the sector. The younger generations are more financially equipped and are also making capital gains from mutual funds, stocks, etc. It has been observed that 53% of millennials prefer to put the proceeds from their other investment gains into real estate eventually, (if not directly.)

A noticeable delta in the number of homebuyers has emerged recently that can be credited to the established and listed developers. The history of successful projects makes it easier for people to gauge the success of forthcoming projects. Transparency in the builder-buyer agreements is essential to make the expectations realistic. Additionally, the developments are equipped with premium luxury provisions which makes it a great investment be it any type of residential development or commercial.l

RERA

There is no denying that the Real Estate (Regulation and Development) Act 2016 has revolutionized the real estate sector. It has helped establish the trust factor amongst property sellers and buyers through increased transparency in the process. This has led to a better experience of home buying and the demand for such property is high so the rentals received are also much better. It has alleviated the concerns of the property buyers and decreased the hassles for the customers.

New Age Technology

Technology has impacted the industry in many ways. On the one hand, prop tech has made the procedure easier, on the other hand, it has brought new channels for investment. The process of registering is much easier with tech intervention. New options like plotted, completed, apartment and commercial projects that suit the preferences of buyers are available. Innovative investing methods like Real Estate Investment Trusts or Groups can be utilised too if you do not want to make a physical investment.

It appears that the market is adapting to the current demands at a rapid rate. It does not come as a surprise that Investors foresee unparalleled progress in the sector. Thus for those who are looking to invest in the real estate sector, it is a good time to take the leap forward.