When buying real estate, money is not the most important thing investors have to deal with. The most challenging part is figuring out how much money you need to invest in real estate and which options are available to people with different budgets.
Residential investment in India has gone up by a lot in the last few years, and it is going to keep going up. Property values have also increased when raw materials and labour costs keep going up. On average, a two-bedroom residential apartment that costs between Rs 40-45 lakh and Rs 60-70 lakh in 2013-14 now costs between Rs 60-70 lakh. In the last decade, home prices in the top seven cities in India have gone up by more than 40%, according to a report from an industry group.
People will have to pay more for real estate because the growth rate has slowed down. So, experts say that now is the best time to buy because the market is complete because of the COVID-19 pandemic, which gives customers more power to negotiate. Suppose you want to make the best money possible by investing in real estate. In that case, the most critical question is how much money you need to make the best capital gains and what options are available to people with different budgets.
The amount of money needed depends on the buyer’s disposable income, the market they choose, and how much money they expect to make. While budding markets require less capital investment and promise to make more money, premium areas require more capital investment because they have many extras. However, the growth rate in the established pockets is low because property values are already close to a saturation point.
Real estate investment can be divided into the following sections in India.
Less than Rs 30 lakh.
In order to get a steady return on your real estate investment, you need to have at least Rs 25-30 lakh. Areas like Jaipur, Noida, Lucknow, and Indore have many residential and commercial spaces for this price. Also, plots of land are available in this price range. Thus, investing in properties in these places can bring steady rental income and a capital gain of more than 8%. This is mainly because these areas have much room for infrastructure development, so real estate prices are going up.
Rs 30 – Rs 80 lakh is the budget for this year.
Investors in India prefer properties that cost between Rs 30 lakh and Rs 80 lakh because they get steady rent and have a lot of value growth. It does not matter if the buyer wants to live in a small or big city. They have many options to choose from under this budget. You can buy a home in Tier 2 cities and some parts of Tier 1 cities, like New Delhi, Mumbai, Pune, Hyderabad, and Gurgaon. Long-term investors can make money from properties in this price range. Migrant professionals prefer to live in these cities because there are many jobs there. Since there are business parks and commercial areas near where you live, it would be good to buy a home there.
It is better to invest in Tier-1 cities, such as fast-growing cities like Pune, with a lot of real estate potential. The appreciation rate in these cities is better than in other cities of the same type. The return on investment (ROI) for commercial properties in Mumbai is 4-6 per cent. When the holding period is more extended, Pune’s ROI is 7-9 per cent.
Rs 80 lakh to Rs 2 crore
In most cities, if you have a budget of Rs 2 crore, you can invest in high-end properties. It is up to you whether you want to live in a house with many amenities and a lot of carpet space. It may seem like a good deal, but people here are not very excited about it. The middle and low-income groups make up the majority of Indian buyers, so they want a home in a better location even if it does not have as many amenities. Rental income can also be a problem because not many people fit this category. If you have a budget of Rs 2 crore, do not spend all of it on one property. Instead, invest in multiple properties if you want steady rental income and a rise in the value of your home.
More than Rs 2 crore
Indian real estate investors with a budget of more than Rs 2 crore can choose from various options. There are many cities in India where you can buy a super-luxurious 5 BHK apartment with more than 2000 square feet. Hyderabad, Calcutta, and Ahmedabad are three of them. There are so many options for investment when you raise your budget from Rs. 1-2 crore to Rs. 3-5 crore. You can choose from luxury residential apartments, independent houses, villas, farmhouses and penthouses in Delhi, Bangalore, and Pune. However, these homes need much work and are not easy to rent.
People in the real estate business say that prices fell more than 4% in the last three months of 2020 and then fell 3% in the first three months of 2021. Though COVID-19 is to be blamed here. The policy changes and relief measures announced by the State government helped boost the demand for real estate, which led to a slight rise in the number of homes sold each quarter. On average, Indian homes rise in value by 6% each year and in 2022 the price of real estate is going to increase even more due to multiple factors like rise in construction cost, Map fees etc. With the real estate market taking its time, planning for long-term investments is more likely to pay off. Calculating the rate of appreciation before investing is also a good idea because it helps you figure out how much money you can expect to make.
Within five years, the home’s value could rise by Rs 15 lakh.
India’s real estate market is attracting investors from all over the world, not just from inside the country. Demand for real estate will go up a lot because people are becoming more likely to buy homes. In terms of how much money you have, there is no limit. However, the most important thing is to look at the risk and appreciation for a better return on your investments.
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