How Much Money One Needs To Invest In Indian Real Estate?

Unlike other investment instruments which are volatile, real estate is one that asset which is stable and tangible. Investors around the world have chosen real estate to park their extra money to earn consistent returns that can at least beat inflation. Not just the serial investors but even the first-timers are prudent enough to reap benefits of real estate cycles. But often people get confused with how much money should they invest and what are the different options available in their budget. Here is a brief analysis of different property options available in a varied price range:-

• Affordable options

Properties below Rs 30 lakh is a modest amount to invest in Indian real estate and you can prioritise your investment on the basis of the returns they will fetch you. For instance, cities like Noida, Greater Noida, Lucknow, or Jaipur can offer you small commercial office in main IT hubs, where rental income would be the main source of returns.

Other than this, plotted developments are also available in Tier II or Tier III cities or in the extended-suburban areas of metro cities. These can fetch you some capital appreciation, provided the infrastructure development is done in time and growth drivers are in place. For instance, areas like Raigad near Navi Mumbai can be a good option to own a land parcel as the town is set to get urbanised in next few years and can offer decent returns. Religious towns of Vrindavan and Mathura are other destinations where there is a continuous flow of tourists and a large share of this group considers retirement options in these towns.

If an apartment is your preferred choice, it would be wiser to invest in the big cities as the rental returns would be assured. Suburbs of Bengaluru, Hyderabad, and Chennai can offer 1BHK options on the outskirts and can attract sufficient rentals to pay off home loan EMIs.

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• Mid-sized investment

Investing in properties ranging between Rs 30 and Rs 80 lakh can be a wise option as this is the most in-demand category in the Indian real estate. Property options available within this range can vary from a big home in a small city to a small home in a big city. Decide how long you would like to stay invested in that asset. If you are a long-term investor, owning a property which can fetch you rental returns along with attractive price appreciation is the best option. Factoring in the rental demand in metro cities for family homes, make a purchase in the location which is close to office areas and have good rental appeal to it. Areas like Nerul, Airoli in Navi Mumbai, Noida Expressway, a few pockets in Gurgaon in Delhi NCR, Sarjapur Road, Bannerghatta, Hebbal in Bengaluru, Madhapur, Uppal, Gachibowli, Kukkatpally in Hyderabad are a few areas which can offer you both benefits at the cost of one.

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If you move up a little in the budget range, there are several options available in the semi-luxury and luxury category. However, appreciation can be a challenge here; most of the investors investing in these properties make such an investment as their second home. Since renting out a luxury property can come with its own set of concerns, here is what you should know before taking a step ahead.

Also read: Keep This In Mind When Renting Out Your Luxury Property

Portfolio investment is another kind of investment which is the most optimal way of using funds in different kind of assets. For investors who have a bigger budget to park in real estate do so by investing a decent amount in varied options than putting the entire sum in just one asset. Such investors also act as funding channels for developers as the amount of returns they get comes from the profit making of the specific project. There is lesser risk involved in this kind of investment along with better returns.

• Asset class investment

There are investors who like to invest in real estate as an asset class. Such properties are basically the signature version of reputed developers who like to target the elite investors through branded residences, theme-based and super-luxury housing. While the minimum investment required for this kind of investment is Rs 5 crore, there is no end to this budget range.

There is a sub-category in this segment which is 'trophy property', which means the area/building has some historical or architectural value associated with it. These assets are worth billions and are more about prestige and status than capital appreciation. One such trophy asset is Homi Bhabha's iconic bungalow which was sold for Rs 372 crore in 2014. Other such examples are the deal of a bungalow in Delhi's Lutyens' zone for Rs 435 crore by DLF's Renuka Talwar, Subhash Chandra-promoted Essel Group's 2.8-acre property on Bhagwan Dass Road for Rs 304 crore, Rajiv Rattan, co-founder of Indiabulls Group, purchase of 2,920 sq yard bungalow on Amrita Shergill Marg for Rs 220 crore.

Also read: All You Need To Know About Branded Residences