Despite a spike in home loan interest rates, the residential real estate market performed well, indicating a positive industry sentiment.
Investing in the stock market is a game-changer for those who can monitor it regularly, as it requires investors’ full attention from 8:30 a.m. to market close. Because of its volatility, equity is no longer the best investment. People are now turning to real estate because it offers long-term benefits. It is regarded as the correct move, particularly when the sector is at its highest level.
For example, despite the local water crisis, Gurugram has set all-time highs in property prices. Because of the proximity of offices in the surrounding areas, Delhi/NCR has become the preferred destination for IT professionals. As demand in Noida, Greater Noida West, and New Noida grows, many large projects have relocated there.
Why do prices increase?
As the government has announced numerous infrastructure projects in Uttar Pradesh, it is clear that NCR will be a new residential and rental income source for many people. At the E&Y Infrastructure Roundtable, Ajit Krishnan, EY India Partner International Tax and Transaction Services, stated, “Investments in renewable energy and roads drive India’s infrastructure growth, paving the way for sustainable development.”
On February 8, 2024, Uttar Pradesh Chief Minister Yogi Adityanath announced infrastructure projects and public welfare schemes, including plans for 21 new airports in the city. Tourism in Ayodhya had already peaked with the opening of the Ram Mandir, with 1.12 crore visitors arriving before the temple was open to the public.
This is not the only factor influencing the current state of the real estate market. The geopolitical landscape has exerted significant pressure on the sector. According to Anarock Capital’s Flux report for the first nine months of FY24, PE investments declined by approximately 26%. During this time, foreign and domestic investors saw a decline in activity.
Despite the presence of many bankrupt builders, Noida and Greater Noida West have attracted several large projects. It demonstrates that the real sector has the potential for regular income and significant lump sum gains. Gurugram has become a dream for those earning between Rs 15 lakh and Rs 20 lakh as property prices skyrocket. To match and reduce the huge price gap within Delhi/NCR, Uttar Pradesh has increased infrastructural development with basic amenities in the region to attract more buyers.
To better understand this investment opportunity, consider Uttar Pradesh. The fluctuations in property values over the last few years demonstrate how dynamic real estate investing can be, with both growth and risk involved.
Profitable investments.
Although single-room sets are no longer as affordable as five years ago, they remain a sound investment.
Rental income is also at an all-time high in 2024. In 2020, two three-bedroom flats generated rental incomes ranging from Rs 10,000 to 12,000. However, they have risen to Rs 19,000 -25,000.
As an adjacent city to Delhi, people are migrating to make a living and require a place to call home. Purchasing or renting a home in Delhi has become costly, paving the way for the NCR region.
Consider the following scenario to comprehend the investment and income: Assume someone invests Rs 10-12 lakh to create a one-bedroom kitchen set. In just seven months, this newly built one-bedroom apartment will begin to generate an average monthly rental income of Rs 15,000-16,000. With an initial investment of Rs 10-12 lakh, the average return on investment (ROI) is 15-18%.
This example demonstrates the potential profit from investing in single-family homes. Even with modest investments, rental income can generate significant returns, making it an appealing option for real estate investors looking for consistent cash flow and long-term appreciation.
Residential Property:
During unprecedented times, the real estate sector encountered significant challenges. However, the post-COVID scenario revealed a very different landscape. With many businesses returning to in-office work environments and discontinuing work-from-home arrangements, the residential real estate sector experienced a significant resurgence.
Despite rising home loan interest rates, the residential market performed well. Recent studies have shown that escalating rental values are one of the key drivers of this demand surge. Investing in ready-to-move projects is becoming increasingly appealing to buyers.
A ready-to-move property presents a win-win situation based on past experiences. In contrast to new projects with uncertain possession timelines, ready-to-move projects offer immediate gratification and peace of mind.
Several examples of this point can be found along the Gurugram-Dwarka Expressway and Greater Noida West, which serve as valuable case studies for investors.
In 2023, 4.77 lakh residencies were sold in new projects. In pre-pandemic 2019, the share of freshly launched supply sales was substantially smaller, accounting for only 26% of the approximately 2.61 lakh dwellings sold that year.
According to Anarock real estate research, NCR has the lowest absorption of newly launched homes among the top seven cities, with only 27 percent of the 65,625 units sold in 2023 being launched during the year. The remaining units were sold in projects that opened before 2023. Interestingly, Gurugram outpaced other markets in the NCR region, with at least 35% of the 36,970 units sold in Millennium City in 2023 being freshly launched.