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Discover why investing in real estate is effective right now.

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Discover why investing in real estate is effective right now.

  • 29 Jul 2023

The best we can do to battle an enemy like the Coronavirus is to spend extended periods of time at home and in solitude for months on end. The loss brought on by this pandemic, however, has proved overwhelming. The world's economies have been disrupted and thousands of lives have been lost in just a few days.

All types of economic activity have ceased as a result of the lockdowns that were imposed. This has caused the equities market to experience a significant decline, which has caused investors' confidence to be shaken. The equity market has only recently experienced a severe blow, dropping by a staggering amount of about 40%. The real estate market has been the investors' glimmer of optimism in the middle of this uncertainty and economic downturn.

Here are some reasons why real estate investing is a good choice for investors at a time when other asset classes are depreciating because to the COVID-19 pandemic.

Deficit demand-

The market's lack of real estate demand has prompted developers to provide alluring deals. Low rates have made property rates more accessible through tempting payment offers and other offers.

Reduction in Repo Rate

According to the RBI's most recent announcement, the repo rate was decreased by 0.75%, and the new base rate was set at 4.4%. As a result, homebuyers now have very favorable prospects because it is now achievable thanks to the decline in interest rates. One will also be able to qualify for a larger loan for their home with the same EMI.

Passive Income

Real estate is a source of passive income, therefore after making an initial investment in a property, one can benefit from generating a rental income. Investors can now take advantage of this to add a new asset class to their portfolio.

not as erratic as the stock market or a commodity investment

The stock market's downward trend has had a significant effect on the commodity market as well. In less than two weeks, the prices of industrial commodities, headed by copper, Brent crude, and rubber, fell up to 9%. However, unlike other asset types, real estate values have not declined as much, making it the safest investment option.

Safety of one’s own home

The turmoil and chaos due to the current situation have well established that owning an apartment is way better than living in a rented apartment. In such times of instability, rental payments can turn out to be a burden financially. Apart from that, living in one’s own home can provide emotional stability and security.

Loan Availability and other protections

Another benefit that the real estate sector enjoys is the higher loan availability as compared to stocks and commodities. This is because real estate prices do not fluctuate as rapidly as the other asset classes. Even the margin requirement for real estate is low which is 70%-80% in case of LAP or housing loan.

Protections, benefits and future possibilities

Acts like RERA(Real Estate Regulatory Authority) and REIT(Real EState Investment Trust) have further secured the process of owning a property by introducing regulatory provisions leading to greater transparency and credibility in dealings.

So as you see, the reasons favouring the prospect of owning a property in the current scenario are many, one must not forget to consider the future possibility of “Work from Home.” It is not far when such a work life pattern and lifestyle will be adapted by many.

To conclude, it could be said that real estate is indeed a robust asset class that offers competitive risk-adjusted returns with less principal-agent conflict and attractive income streams. One must seize the benefits that the current opportunity provides as it is correctly said, ”Strike the iron when it is hot”.But it is only after choosing the best proposition for oneself and having taken expert advice that one must make a move towards booking a dream asset.

 

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