Properties has traditionally been an avenue for considerable investment by itself and investment opportunity for High Net-worth Individuals, Financial institutions and also individuals looking at viable alternatives for investing money among the stocks, bullion, property and other avenues.
Money invested in premises for its income and capital growth provides stable as well as predictable income returns, similar to that of bonds offering either a regular return on investment, if property is rented as well as possibility for capital appreciation. Like all other investment options, Siam real estate investment also provides certain risks attached to it, which is quite different from other investment funds. The available investment opportunities can broadly be identified into residential, commercial office space and retail sectors.
Financial commitment scenario in real estate
Any investor before considering housing investments should consider the risk involved in it. This investment option determines a high entry price, suffers from a lack of liquidity and a strong uncertain gestation period. To being illiquid, one simply cannot sell some units of his property (as located on the internet have done by selling some units of equities, money or even mutual funds) in case of urgent need of capital.
The maturity period of property investment is uncertain. Opportunist also has to check the clear property title, especially for the exact investments in India. The industry experts in this regard claim that property purchase should be done by persons who have deeper pockets and longer-term view of their investments. From a long-term financial returns mindset, it is advisable to invest in higher-grade commercial properties.
The returns coming from property market are comparable to that of certain equities and also index funds in longer term. Any investor looking for rocking his portfolio can now look at the real estate sector as a safe and sound means of investment with a certain degree of volatility and probability. A right tenant, location, segmental categories of the Indian property market and individual risk preferences will hence more prove to be key indicators in achieving the target yields via investments.
The proposed introduction of REMF (Real Home Mutual Funds) and REIT (Real Estate Investment Trust) will boost these real estate investments from the small investors’ point of view. This will also allow small investors to enter real estate market with contribution as less as INR 10, 000.
May demand and need from different market players of the house segment to gradually relax certain norms for FDI in this sector. These foreign investments would then signify higher standards of quality infrastructure and hence would affect the entire market scenario in terms of competition and professionalism regarding market players.
Overall, real estate is expected to offer a decent investment alternative to stocks and bonds over the coming ages. This attractiveness of real estate investment would be further enhanced because of favourable inflation and low interest rate regime.
Looking forward, it’s possible that with the progress towards the possible opening up of the real estate mutual funds industry and the participation of financial institutions towards property investment business, it will pave the way for more sorted investment real estate in India, which would be an good way for investors to get an alternative to invest in property portfolios during marginal level.
The two most active opportunist segments are High Net Worth Individuals (HNIs) and Financial Institutions. Although the institutions traditionally show a preference to commercial expense, the high net worth individuals show interest in investing in residential in addition to commercial properties.
Apart from these, is the third category of nonresident Indians (NRIs). There is a clear bias towards investing in homes than commercial properties by the NRIs, the fact could be reasoned as emotional attachment and future security sought because of the NRIs. As the necessary formalities and documentation for purchasing real estate, real property, properties other than agricultural and plantation properties are quite easy the rental income is freely repatriable outside Asia, NRIs have increased their role as investors in real-estate
Foreign direct investments (FDIs) in real estate form some of the total investments as there are restrictions such as a minimum secure period of three years, a minimum size of property to be developed along with conditional exit. Besides the conditions, the foreign investor will have to finish a number of government departments and interpret many complex laws/bylaws.
The concept of Real Estate Investment Trust (REIT) is on the verge of intro to probiotics benefits in India. But like most other novel financial programs, there are going to be problems for this new concept to be accepted.
Real Estate Investment Trust (REIT) would be structured as a company dedicated to using and, in most cases, operating income-producing real estate, such as apartments, browsing centres, offices and warehouses. A REIT is a company of which buys, develops, manages and sells real estate assets in addition to allows participants to invest in a professionally managed portfolio involving properties.
Some REITs also are engaged in financing real estate. REITs are pass-through entities or companies that are able to distribute most income cash flows to investors, without taxation, for the corporate level. The main purpose of REITs is to pass the revenue to the investors in as intact manner as possible. For that reason initially, the REIT’s business activities would generally often be restricted to generation of property rental income.
The factor of the investor is instrumental in scenarios where the attraction of the seller and the buyer do not match. For example , should the seller is keen to sell the property and the identified occupier intends to lease the property, between them, the deal will never be fructified; however , an investor can have competitive yields by buying the property plus leasing it out to the occupier.