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Should you invest in real estate next year?

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Should you invest in real estate next year?

Real estate is always one of the most preferred investment classes for a large section of investors in India. With reforms cleaning up the real estate sector in recent times, should you invest in real estate in 2018? Real estate investments like many other asset classes can be lucrative when one enters the market at a time where there is a slight downturn and prices are on the lower side. Buying real estate when prices are peaking may not always be a good decision since returns may not translate into expected figures.

You can consider investing in real estate in 2018 due to the regulatory changes that have brought greater transparency into the sector. These include the GST (Goods and Services Tax) and the Real Estate Regulatory Act (RERA). All real estate projects now have to comply with RERA provisions and this will ensure that projects are majorly delivered in a timely manner while also making sure that money invested by buyers is not spent on other activities. RERA offers greater consumer protection in real estate and it will now be difficult for non-serious or fraudulent players to operate in the country. Only committed and reputed real estate developers will be able to survive. This will benefit both realty sellers and buyers in the future.

Real estate is now in a phase which can be labeled as a buyer’s market since higher prices and lower demand has led to huge piled up inventory for real estate developers across India. Demonetization has also affected the sector badly. As a result, it is a buyer’s market at present with prices plunging and developers eager to clear stuck up inventory with special schemes, freebies and more. However, this phase will not last for long since the realty sector is already witnessing recovery signs. Developers are now focusing on finishing their current projects. New home launches are already lower across the top 8 Indian cities.

Buyers are currently in a good position to negotiate prices and terms. As per the latest reports, just the MMR (Mumbai Metropolitan Region) and NCR (National Capital Region) have unsold inventory cumulatively touching close to 3.8 lakh units approximately. Another reason to buy real estate in 2018 is the low interest rates. The RBI has already re-jigged key lending rates and home loan interest rates have fallen to anywhere between 8.30-8.40% across most banks and financial institutions. This will help buyers save on their EMI costs and they can easily get low-cost loans in the current scenario. Home loan rates are expected to remain low for the next few quarters and may go down even further.

Real estate markets in India are also witnessing a revival in demand from the global investor community due to greater transparency in the sector. The realty sector may draw PE (private equity) investments to the tune of $4 billion in this fiscal year as per industry studies. Investors from countries like Singapore, Canada and the United States are also eyeing Indian real estate along with investors from Japan, Qatar, China, Netherlands and Hong Kong among others. This will naturally spark a boom in the sector over the next few quarters and it is best to invest now in order to reap rich returns.

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