Real Estate Investment Will Offer Profitable Returns in 2022

Shubham Arora, Director, Sheerbulls India 

In view of the volatile equity markets due to global geopolitical concerns, lackluster returns on other safe asset classes, real estate with its post-covid smart recovery and the continuous policy push by the central government, remains the best asset class in terms of safe and profitable investment.

For a long time, almost a decade, real estate was a dud investment for many investors. However, the property market is back on the radar of investors as the homebuyers are flocking to the property market, thanks to limited supply, ample liquidity and the rock bottom interest rates. Real estate despite the Corona setback, showed great resilience and record recovery, belying the skepticism of property buyers to invest in view of the looming threat of pandemic. The real estate industry has bounced back with residential sales jumping to new highs.

Like a lot of other sectors, the real estate sector was also unprepared for the pandemic onslaught but following the second wave, it showed remarkable resilience. The year 2021 was a game changer for the sector. As the world’s largest vaccination drive gained momentum, the sentiment of the real estate sector as a whole went up and financial year 2022-23 is now seen as the turnaround year for the sector which will lead to a robust growth for the industry.

The pandemic has been a blessing in disguise for the industry as the low cost of lending has boosted the morale of developers to finish the pending projects, whereas the buyers made full use of the low EMIs due to record bottom interest rates. Top cities in India including Gurugram, Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad and Pune are poised for favorable housing sales, sowing the seed for revival of commercial real estate as well.

The changing dynamics in favour of real estate, with fast improving economy, could be attributed to the changing consumer sentiment and behavior with preference for home ownership in the wake of uncertainties of rental accommodation and requirement of health safety. Even the millennials are adding to the demand. The new age youngsters, who relocated from Tier II and Tier III cities to Tier I cities and metros, are now in the favour of having their own house, instead of going in for rental accommodation. This is also now adding to more demand for the sector.

The new investors or the homebuyers demand spacious houses, with luxury and a large number of amenities, to showcase their lifestyle. Housing is now a style statement Another reason for the rising demand for homes is the work from home (WFH)option or the remote work culture, with employees visiting their offices occasionally and instead working from their home offices set up by installing workstations there. As such, people, today, are on the lookout for homes with extra room or space, which could either serve as an office or study. As mobility got restricted, people started searching for homes that provided space for entertainment, exercise and recreational areas, which in turn added to   demand.

Another key reason for the preference for real estate as an investment class is the lackluster return on other safer asset classes. Barring the volatile equity markets or the unregulated cryptocurrencies, safer bets like bonds, FDs and gold have failed to offer better returns to investors. With the rise of geopolitical concerns globally and strong outflow of foreign funds, equity markets have turned volatile and unpredictable. In this scenario, real estate is poised to emerge as a lucrative option for both risk bearer and risk hesitant investors.

Real Estate is an asset class with long lasting value, evergreen utility and security for the future even in the uncertain times. This, coupled with easy financing, has made it a reliable investment for all, offering steady and solid returns. Moreover, perceiving the revival potential of real estate, the government has also come up with progressive policies to give a boost to the sector. The government is focused on the revival of demand in the economy through real estate and infrastructure push. The centre also aims to provide a conducive environment for housing, aided by RBI’s policy stance of keeping interest rates low for a long time. Considering all this, real estate is set to follow a high growth trajectory this year and beyond 2022, holding promising prospects for investors.