Investments in Equity Or Real Estate?

Investments in Equity or Real Estate?

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Wondering If you should invest in equity or real estate? This blog will at least get you one step closer to making a sound decision. This topic is one that has been a real show stopper, after all being in the world where you see big players dealing in shares would you if you were in the corporate game invest in real estate?

Let me tell you something I heard at this investment-based conference. The product being discussed was in the game of real estate and the prices being about 24 Lacs. A very reasonable Investment for a matter dealing with the real estate market and also apart from this they give the buyer a grace period of 30 months after you pay a 10% value of the property. After which technically, you own a pretty luxurious chunk of land which again is expected to be appreciated at a very minimal rate of 3.5%. Keeping in mind that there is an EMI-FREE period of 2.5 Years. Which after calculating the mere appreciation gives you a good boost on your purchased property by about 2 lacs and even before you can consider paying the first EMI you can be freed of the burden of EMI by selling it whomever is willing to buy and get your capital with a reasonable number of returns as well. The property being discussed over here is a Project by a Builder Group caller “SHRIRAM”. Although, it is a must to keep in mind the thorough evaluation of the property and the factors affecting it.

 Now investing in equity? Good idea? There are numerous sources that are very pro-equity like investing, opinions that people have and what they mean by that is that buying equity is more like investing in the future of the country’s economy. That can be said because as we know it with a growing economy there are better opportunities for the growing corporate companies. I say that it is a way of staying ahead of the inflation trends these days. The reason being it gives you an average return of 10% per annum. Of course, the risks are much higher in these investment areas. Hence all investments must be made with utmost caution.

To summarize both the investment options have their own kinds of risks. It all comes down to the investor! Where He must choose what is the kind of risk, he is willing to take. Now while the stock market is an index that allows us to scientifically measure the rate of the return, the job is a lot harder for real estate. Specific cases in certain locations have generated far higher returns that others across land, residential, retail and commercial spaces across the country. According to a study by Cians Analytics on the returns from various asset classes in India during 1991-2013, real estate and equity have given maximum returns to investors. Looking at the overall returns, the study stated that real estate outperformed all other asset classes during the 23-year period with an annualized rate of 20% while equity generated an annualized return of 15.5% on a nominal basis during the past 23 years. This was given by a source called Times Now. Real estate is something that you can physically touch and feel – it's a tangible good and, therefore, for many investors, feels more real. Maybe this partially accounts for the high return on the investment, as from 1978-2004, real estate has had an average return of 8.6%. For many decades this investment has generated consistent wealth and long-term appreciation for millions of people.

Generally, there are two main types of real estate: commercial and residential. While other types exist (mobile home parks, strip malls, apartment buildings, office buildings, store fronts and single-family homes), they generally fall into those two categories. Making money in real estate isn't as cut-and-dry. Some people take the "home flipping" route – searching for distressed properties, refurbishing them and selling them for a profit at a higher market value. Others look for properties that can be rented in order to generate a consistent income. 

Generally, a down payment of up to 20% of the purchase price can be made, and the rest can be financed. This gives you leverage, meaning that you can invest in different types of properties with less money down, helping to build your net worth or income that you could make off the properties. While this can be a positive, if this leverage is used incorrectly, you may owe more on the properties than they are actually worth.

While talking about stocks the aspects taken into consideration change. Here’s how we look at investment in stock... With a stock, you receive ownership in a company. When times are good, you will profit. During times of economic challenges, you may see diminishing funds as the earnings of the company drop. Taking a long-term approach and being balanced in many areas can help build your net worth at a much greater rate, compared with real estate. 

As with real estate, financing in stocks allows you to use margin as leverage to increase the overall number of shares that you own. The downside is that, if the stock position falls, you could have what is known as margin call. This is where the equity, in relation to the amount borrowed, has fallen below a certain level and money must be added to your account to bring that amount back up. If you fail to do this, the brokerage firm can sell the stock to recover the amount loaned to you.

Now, it all comes down to one fact. What kind risk is the individual willing to take? And also, how long is willing to wait to see the tree bear fruits.  Taking these two factors will help him narrow down the kind of commitment each investment requires. 

Hope, this blog helped you get a step closer to what you desire. Happy Buying!

The Dynamic and Evolving Real Estate Market in Indian Cities The real estate market in Indian cities is a multifaceted and continuously evolving sector influenced by various dynamic factors. With rapid urbanization, the demand for residential, commercial, and industrial properties is on the rise across India's metropolitan and smaller cities. Government initiatives such as the Real Estate (Regulation and Development) Act (RERA) and the Pradhan Mantri Awas Yojana (PMAY) are playing pivotal roles in fostering transparency, promoting affordable housing, and driving market growth. In this comprehensive analysis, we will delve into the myriad aspects shaping the real estate market in Indian cities, exploring urbanization trends, government policies, infrastructure development, market challenges, and opportunities. The content herein reflects the insights and analysis provided by Housystan, aiming to offer a detailed understanding of the current landscape and future prospects of the Indian real estate sector. #### Urbanization and Its Impact Urbanization in India is occurring at an unprecedented pace, with millions of people migrating from rural areas to urban centers in search of better job opportunities, education, and living standards. According to the United Nations, India is expected to add 416 million urban dwellers by 2050, taking the total urban population to over 800 million. This massive urban influx is driving the demand for housing and commercial spaces in cities like Mumbai, Delhi, Bangalore, Hyderabad, and Chennai. The need for residential properties is particularly acute, with burgeoning populations requiring a variety of housing options ranging from affordable to luxury segments. The influx of people has also led to the expansion of city boundaries, creating new suburban areas and satellite towns that offer relatively lower property prices and more space. These new growth corridors are becoming attractive investment destinations for both developers and buyers Government Initiatives and Policies The Indian government has introduced several initiatives and policies to regulate the real estate market, enhance transparency, and make housing more affordable. One of the most significant of these initiatives is the Real Estate (Regulation and Development) Act, 2016 (RERA). RERA aims to protect homebuyers and boost investments in the real estate sector by ensuring accountability and transparency. The act mandates the registration of all real estate projects and agents, making it compulsory for developers to deliver projects on time and as promised. The Pradhan Mantri Awas Yojana (PMAY) is another crucial initiative aimed at providing affordable housing to all by 2022. The scheme targets economically weaker sections, low-income groups, and middle-income groups, offering subsidies on home loans to make homeownership more accessible. PMAY has been instrumental in boosting the affordable housing segment, encouraging developers to focus on constructing budget-friendly homes. Infrastructure Development Infrastructure development is a key driver of real estate growth in Indian cities. The government's focus on building and upgrading infrastructure such as roads, highways, metro rail networks, airports, and smart cities is significantly enhancing connectivity and accessibility. Improved infrastructure not only makes cities more livable but also increases the value of properties in well-connected areas. For instance, the construction of the Mumbai Metro has made commuting more convenient and reduced travel time across the city, leading to increased demand for properties near metro stations. Similarly, the development of new highways and expressways, such as the Delhi-Mumbai Industrial Corridor (DMIC) and the Bengaluru-Chennai Expressway, is opening up new areas for real estate development, attracting investments and spurring economic growth. Residential Real Estate The residential real estate market in Indian cities is diverse, catering to various segments ranging from affordable housing to high-end luxury apartments. The demand for affordable housing is driven by the growing middle class and urban workforce, while luxury housing appeals to affluent buyers seeking premium amenities and exclusive locations. Affordable housing has gained momentum due to government schemes like PMAY and the availability of affordable home loans. Cities such as Pune, Ahmedabad, and Hyderabad are witnessing significant development in this segment, with numerous projects offering quality homes at reasonable prices. On the other hand, luxury real estate is flourishing in metropolitan cities like Mumbai, Delhi, and Bangalore. These cities boast high-end residential projects featuring world-class amenities, state-of-the-art infrastructure, and prime locations. The luxury segment attracts not only wealthy domestic buyers but also non-resident Indians (NRIs) looking to invest in premium properties back home. Commercial Real Estate The commercial real estate market in India is also experiencing robust growth, driven by the expanding economy, the rise of the IT and services sectors, and increasing foreign direct investment (FDI). Cities like Bangalore, Gurgaon, and Hyderabad have become major commercial hubs, hosting numerous multinational corporations, IT parks, and business centers. The demand for office spaces has surged, particularly in Grade A buildings that offer modern amenities, sustainable design, and strategic locations. The co-working space segment is also gaining popularity, providing flexible and cost-effective workspace solutions for startups, freelancers, and small businesses. Retail real estate is another thriving segment, with the growth of shopping malls, high street retail, and mixed-use developments. The rise of e-commerce has also influenced the retail real estate market, leading to an increased demand for warehousing and logistics spaces. Industrial Real Estate Industrial real estate in India is undergoing a transformation, fueled by the government's Make in India initiative, which aims to boost manufacturing and attract foreign investments. The development of industrial corridors, special economic zones (SEZs), and logistics parks is creating new opportunities for industrial real estate. Cities like Pune, Chennai, and Ahmedabad are emerging as industrial hotspots, offering state-of-the-art facilities, robust infrastructure, and favorable business environments. The demand for industrial spaces is also being driven by the growth of the e-commerce sector, which requires extensive warehousing and distribution networks. Market Challenges Despite the positive outlook, the real estate market in Indian cities faces several challenges. One of the primary issues is the regulatory environment, which can be complex and cumbersome for developers. Delays in obtaining necessary approvals and clearances can hinder project timelines and increase costs. The availability of land is another significant challenge, especially in densely populated cities where land prices are exorbitant. Land acquisition can be a lengthy and contested process, often leading to disputes and project delays. Financing is also a critical concern, with developers often facing difficulties in securing funding for their projects. High interest rates and stringent lending norms can limit access to capital, affecting the pace of real estate development. Additionally, the COVID-19 pandemic has had a profound impact on the real estate market, disrupting construction activities, altering buyer preferences, and creating economic uncertainty. While the market is showing signs of recovery, the long-term effects of the pandemic are still unfolding. Opportunities for Investors Despite the challenges, the Indian real estate market offers numerous opportunities for investors. The growing demand for residential, commercial, and industrial properties presents a lucrative investment landscape. Investors can benefit from the potential for capital appreciation, rental income, and portfolio diversification. The affordable housing segment, supported by government incentives and increasing urbanization, offers significant growth prospects. Investors can capitalize on the rising demand for budget-friendly homes, particularly in emerging cities and suburban areas. The commercial real estate sector, driven by the expansion of the IT and services industries, presents attractive investment opportunities in office spaces, co-working facilities, and retail properties. The industrial real estate market, boosted by the Make in India initiative, offers potential for investments in manufacturing facilities, logistics parks, and warehousing spaces. Staying Informed and Making Informed Decisions In the dynamic and ever-changing real estate market, staying informed about market trends, regulatory changes, and emerging opportunities is crucial for making well-informed investment decisions. Keeping abreast of government policies, infrastructure developments, and economic indicators can help investors and homebuyers navigate the complexities of the market. Engaging with real estate professionals, conducting thorough market research, and leveraging data analytics can provide valuable insights and guide investment strategies. Understanding the nuances of different market segments and identifying high-growth areas can help investors maximize returns and mitigate risks. Conclusion The real estate market in Indian cities is a vibrant and evolving sector shaped by urbanization, government policies, and infrastructure development. The demand for diverse types of real estate is expected to remain robust, driven by the growing population, economic expansion, and increasing urbanization. While the market presents various challenges, it also offers numerous opportunities for investors and homebuyers alike. As the real estate landscape continues to transform, staying informed and making well-informed decisions will be key to capitalizing on the potential of this dynamic sector. Whether you are a developer, investor, or homebuyer, understanding the factors influencing the market and leveraging the available opportunities can help you achieve your real estate goals. The content mentioned in the above article is solely a view of Housystan and should not be considered as fact or verdict. Housystan analyses the current market trends and provides insights accordingly.