Some interesting insights for Residential Real Estate investors

We Indians have a high affinity for physical assets such as jewelry and real estate. There have a lot of developments and the new age buyer only wants to invest in physical assets if it gives a good return. In such a scenario, Real estate becomes a good investment option and of course, there is no denying the feeling of security and pride that every Indian derives from owning property. Investing successfully in commodities or physical assets requires a higher degree of research, given their heavy dependence on fund flows. Though demonetization has bewildered real estate activities, but there is no reason for investors to loosen their stance. 

It is true that the market doesn’t have momentum today or in the days to come, but there is a lot to do. Investing in commercial and residential properties for rental yield is an investment many people make to create a secondary source of income. The rental market got developed primarily in the metros where people from other states come and settle for work. For other smaller cities, rental markets are not that developed or uniform. So here we have some quick takeaways for residential real estate investors that they should always keep in mind:

Residential Rental Yields- Rental Yield represents an annual return from renting your house in that locality. Your property will become an asset only once it starts giving you rental returns. Technology has made measuring the locality rental yields easy to track. In the last 8-9 months, localities of Delhi like Tilak Nagar, Safdarjung Development Area, New Friends Colony, Kailash Colony, in Delhi have seen a good growth in the rental yield. The areas of New Thippasandra, Vasanth Nagar, Airport Road, Hebbal Kempapura and B Narayanapura in Bengaluru and Bandra East, Shastri Nagar, Lokhandwala Twp, Mira Bhayandar, Sewri in Mumbai are more examples of the metro’s which have shown an increase in the rental yield.

Circle rates: Keeping a track of the circle rate is very important as the purpose behind investing in such property are earning returns. You should therefore keep a track of the prevailing circle rates of localities. Circle rate is a crucial factor amongst other factors, therefore as a buyer, you should be very well informed.

Price alert- There are numerous applications available today, which helps you in tracking the price movements. As a result, many buyers have put their property buying decision on hold, which is okay as we are expecting correction and regulation in prices! What you can do at the moment is identify the properties and locations where you want to invest and set the price alert for yourself.

Even the government has been promoting rental housing in Indian cities. A regulation in this segment will increase the investors demand for housing in areas where there is a huge requirement for rental housing. Rental accommodations are the most preferred options for most people who have newly migrated into a city for employment, or are just at the outset of their careers. Just for an example Pune every year sees rental housing market as a lifeline for countless individuals and families and thus rental housing is also a prime focus for real estate builders as well as investors. Even globally, the share of the rental market has always increased. Rental housing is always in demand - regardless of how the home sales market is performing. While rental housing is the only bulwark against the growing cost of home ownership, it offers a greater flexibility and puts significantly lower financial strain on both the owner and the tenant.

India’s residential is majorly run by individual homeowners, rather than real estate companies. While there are many benefits, renting out means to incur property taxes, society maintenance charges and normal wear and tear which could take up a third of the rental income. Millions of people pour into the metro cities in India, to seek employment opportunities in the sprawling conurbations and lands of opportunity. The rental market is ripe for innovation. In India, while in rural areas most of the people live in their own homes, renting is more common in the developed parts of the country. Moreover, a majority of own homes is mostly inherited. If we look at the past figures, the average monthly rent in the urban areas has increased, indicating that the past few years have witnessed a significant rise in rent across urban India.