While the millennials abroad are less focused on investing in property, the scenario in India is positive considering our values and belief which associates acquisition of property to security.
Indians are slowly moving from a ‘saving’ led to a wealth generating society. The move can certainly be attributed to today’s young generation colloquially termed as ‘Millennials’. The millennials have a mindset that goes beyond conventional thinking of only saving. Achieving financial freedom is an aspiration which is high on their list and they actively seek investment opportunities which promises a high rate of return.
Property has been regarded as one of the oldest wealth creation tools in India, which allows one to reap numerous benefits. Some individuals purchase properties for tax saving purposes, while others view it as a source of income. Before making any property investment decision, a few essential factors need to be kept in mind to ensure profitable long term returns.
Consistent cash flow – Extra income on a regular basis is always welcomed. Commercial property investment is one way to ensure a handsome rate each month and it generally appreciates better than residential property. However, one has to factor in certain aspects such as vacancy period, overheads such as repairs and utilities management.
Capital appreciation – People in India are usually inclined to invest in residential properties due to the security factor. But in order to fully realize the potential of residential real estate, one has to be patient over the long term to register considerable financial gains.
Make profitable investments – There are a set of smart investors who solely buy properties for rental purposes. The rental amount collected each month covers majority part of the EMI and then completely over a period of few years. That way, one is able to cover the entire cost of the property and at the same time benefit from increased rentals and property value in the long run.
In all the above scenarios, the chosen property should have good infrastructure, well connected public transport and ample potential for further growth. Proper planning before investing not only reduces the risk of unwarranted losses but also contributes significantly towards achieving various financial goals one has planned for different life stages.
One the other hand, investment at an early age makes for a profitable decision as owning a house eliminates the need for recurring rental cost towards accommodation. Also, it creates a win-win situation for salaried individuals as the EMI amount can be claimed as a deduction on taxable income resulting in reducing the tax liability significantly. The EMI factor also brings a disciplined approach into financial planning to a large extent.
Industry experts believe that a dearth of land and rapid urbanization coupled with India's increasing population will cause demand to be higher than supply. The recent radical development in the real estate sector such as Real Estate (Regulation and Development) Act augurs well for the industry, including potential investors. This consumer friendly act ensures provisions that will safeguard consumers’ interests and also penalizes developers for any project delay or unfair practices.
With a plethora of upcoming projects that are RERA certified, there has never been a better time to invest in property.