The real estate sector in India has seen a steady growth over last few years and the commercial sector, in particular, has been on the rise. Historically speaking, real estate has been one of the prominent choice for investors as this gave them a sense of security. But industry reports in the recent past have shown that investors have started moving more towards stock/capital market because real estate as an industry became difficult and less stable. Buyers suffered non-deliveries, delayed deliveries and this lack of trust in real estate proved to be fatal for the industry. Investment in real estate was turning out to be insecure due to the increased risk from developers’ side and higher returns on the capital market. However, major positive policies announced by our government in the recent 1-2 years, like the initiation of the Real Estate Regulatory Authority (RERA) has been a major step taken by the government in order to maintain the transparency and to safeguard the interest of the home buyers. This has created a tremendous amount of confidence in the minds of the consumers, thus contributing to the expansion of this segment and making the industry more organized.
The announcement of the reduction of Goods and Services Tax (GST) to 8 percent for all houses qualifying under the credit link subsidy scheme PMAY has itself been a massive step by the government in order to achieve the goal of making housing for all a reality by 2022. India as a country is a major business giant, and the government is focusing a lot more on employment generation and hence, all these incentives provided by the government would promote investments in the real estate segment.
In the recently announced Union Budget 2018, reintroduction of long term capital gains (LTCG) tax was done. This would see many investors paying tax on the gains made by selling of equity after holding it for a year. With the implementation of the newly imposed tax at the rate of 10 percent of the profits earned to the tune of one lakh and above has clearly spooked up the Indian markets with Sensex and nifty dipping down to over 800 points the day right after the announcement. Indices of both the markets felt significantly despite of maintaining a considerable high prior to the budget. The rollout to the LTCG tax would bring in a marginal revenue of Rs. 20,000 crore in the fiscal year 2018-19, this would be beneficial for the government in the long run. Moreover, the stock market remains highly volatile and this has caused worry amongst the mid-income segment of customers as this proposes a risk to their complete savings/capital value. While investing in real estate gives you psychological satisfaction as both your regular and return income is safe, investing in stock market can be risky as chances of profit and loss are equally there.
In real estate, your long term income of the asset as well as your regular income is safe, which is an advantage you do not get with stock market investment. When you invest in stock market, regular monitoring of the capital is required whereas real estate eliminates that extra stress. At the same time, real estate in India has been quite safe and steady due to various reasons such as improvements in structural reforms, more liberalised foreign direct investment, fixed rental income, huge demand, increased transparency etc. And this has made real estate a completely buyer’s market. Developers all around are providing all kinds of attractive deals encouraging bookings for their property thus making this the right time to invest in real estate. The situation right now is apt to indulge in property buying and real estate should see more such opportunities in future to provide maximum benefits to the customers and grow as an independent industry.