Article Credit: Live Mint
Over the past couple of years, one of India’s fastest-growing industries has been the real estate industry. For PMAY houses, the Union Budget 2023–24 allocates Rs. 79,000 crore which is a rise of 66% from the previous year. A 10 crore limit was also suggested by FM for the section 54 and section 54F deduction from capital gains on investments in residential property. The overall capital expenditures (Capex) budget for the current fiscal year has been raised to INR 10 lakh crores, or around 3.3% of the total GDP, which will enhance housing demand and improve infrastructure in Tier 2 and Tier 3 cities. So, for investors who are looking to invest in real estate sectors in 2023 post Budget 2023 announcement, experts suggest these 3 things to remember before investing.
When it comes to real estate investing, one should always be cautious given that it is an immovable asset and is not very liquid. If you follow asset diversification as an investment principle then always consider no more than 25% of your savings in real estate. Being from the office space industry, one needs to have a long-term view when investing, especially when it comes to commercial real estate. Three things to always remember:
Invest in high-quality grade A assets: These assets have the right foundations, design and most importantly perspective in the market that helps keep demand for such properties high and hence rentals high as well. In Mumbai buying pre-leased assets can give consistent returns of 8%. The building you invest in should not be heavily stratified and sold to many investors as it makes managing the operations of the building difficult.
Look out for REITs: If you don’t have enough money to buy an entire asset, REITs are great opportunities for investing money as they also give similar returns. We should see the launch of a couple of new REITs in Y2023 from reputed real estate developers.
Look for ESG-compliant buildings: The world is now moving hard on sustainability and we can get a sense that the winds are changing. Real Estate that has thought through sustainability since inception and in operations will be well poised for the future and they will see higher value returns much sooner than those that are not.
