The last couple of months have been brutal to investors across the world, with more than a 30% drop in stock prices. The overnight stock market erosion and the pandemic has effectively established two facts;
- Real Estate, as an asset class, is a more reliable option than the volatile stock market,
- and owning an apartment as compared to rented accommodation is safer.
The COVID-19 pandemic has had a significant impact on all industries and aspects of people’s lives. Over 2.6 billion people are now living under a certain degree of lockdown and are ‘quarantined’, with global firms urging employees to work from home. The pandemic has left us all in a state of shock but with small steps, we will all rise again.
As our livelihoods and the economy move out of the lockdown in the near future, businesses will begin the journey of ‘re-entry’ and ‘revival’. Industries and sectors will adjust to a ‘new normal’ and take lessons from economies like China that are slowly recovering.
Investors across the world are looking for low-risk, high-yield opportunities and for investments that are less related to other asset classes.
Although sentiments have been dampened, investor appetite in markets like Real Estate remains, according to JLL’s recent report on Global Real Estate implications.
If you look at a broader timeline, investments have fluctuated over the years through several downturns but the overall trend for high allocations to real estate has been steady. And there are negligible chances for this trend to reverse.
Homebuyers are likely to leverage the impact of COVID-19. Here are 7 reasons why investing in Real Estate in these testing times would benefit you, especially when the economy kicks back into revival mode.
#1 RBI’s Rate Cuts
Low-interest rates (home loan interest rates are at an all-time low now: 7.4%) and high tax exemption (rebate against home loan interest payment is as high as Rs 3.50 lakh per annum) for buyers.
#2 Technology-led Homebuying
COVID-19 lockdown has accelerated technology-led home buying in India, making it possible to inspect properties online as well as negotiate and finalize deals. Virtual site visits are also becoming a reality and a large chunk of the property selection and purchase process can now be done digitally. Eden Park’s team has been working towards actively addressing the needs of the technology-led homebuyer in current times. Several states introducing e-registration for property adds an impetus to the digital homebuying process.
#3 Reliable Investment Option
Compared to other investments like stocks, gold, etc. As per a report by 99acres to gauge buyers’ sentiments in the times of the COVID-19 pandemic, buying a home or investing in real estate is still on the minds of prospective homebuyers because of the reliability it offers. In another survey report by ANAROCK, it was seen that, post the pandemic a majority of real estate buyers (90 percent) expect a price correction, and 31 percent of them felt that real estate is still the best option to invest followed by fixed deposit, gold and the stock market.
#4 High Future Returns
When it comes to asset classes, real estate has always been a good bet – be it for regular income in the form of rentals, or appreciation in capital value. As Businesses turn around, the GDP growth rate will rise, and returns on Real Estate will definitely fetch a better ROI. The inherent demand in real estate is directly linked to the growth of GDP, which makes it the best investment option.
#5 Trusted and Safe Investment
Structural changes and policy reforms including Demonetization, RERA, GST, and IBC imbibed a great deal of confidence in real estate, and consumers will certainly go for safer investment options when there is limited liquidity. Even more so, because home-ownership continues to be the most important & biggest investment for people.
#6 Increased opportunities for Buy-to-let Real Estate
The pandemic has resulted in population displacement with people coming back to their home cities and even NRIs returning to India. The depreciating value of rupee against the US dollar means increased liquidity for this set of homebuyers, who are now looking to buy property and also gain from rentals. It can also offer an alternative route onto the property ladder for first-time buyers who are unable to buy in their preferred area. Rental yields are currently pegged at 2.5%. And with effective interest rates at 6.75%, the net effect, if a home is purchased to let out, comes to 4.25%. This beats long term inflation figures of India hands down, thus presenting another win-win situation. With a lower interest rate, rental yields are also expected to increase. Better yet, for investors at Eden Park, which has been a sought-after investment destination for its high rental returns.
#7 Lessons from the past
If one compares the present scenario with home loans being offered in the year 2002–03 (recession), the interest rates pretty much hovered at similar levels. In fact, lower home loan interest rates coupled with affordable prices acted as catalysts back then leading to a consistent growth in property prices across markets in the ensuing years. This will help many home buyers to finally make home-ownership a reality.
Still debating on the importance of real estate in a post-pandemic world? Let’s take a look at a similar market in a country that has overcome the situation. The recent JLL report stated- the level of March 2020 residential property sales in China stands at almost 95% in comparison to the December 2019 levels. The Indian real estate market is also likely to witness a similar scenario after attaining normalcy.
For those who have been waiting for the right time to take the plunge, this time is opportune and profitable.
Real Estate is safe, promises high returns, assure rental income and safety that no other asset class offers. The global financial crisis is upon us, and your money should go into profitable avenues.
However, make sure to not just invest in any property. Look for credibility, pick an ideal location, and do not compromise on the quality of your investment.
If you’re looking to know more about ideal property investments and how to make a smart purchase with 360-degree guidance, speak to our Real Estate experts at Eden Park. Now, you can book an apartment at just Rs. 9997/- Make your dream home a reality, choose Eden Park.