At Piramal Realty, we strive to redefine modern living by offering properties that deliver value, quality, and trust. Let’s explore the top real estate benefits that make this asset class a preferred choice for investors in India.
Top Benefits of Investing in Real Estate in India
Investing in real estate in India offers numerous benefits, making it a great choice for investors. Wondering why invest in real estate? It gives you a reliable asset that increases in value over time, helping you build wealth in the long run. So, let's look at the benefits in detail :
1. Steady Rental Income
One of the most significant advantages of real estate investing in India is the high possibility of earning a steady rental income. As India continues to urbanise, migration to cities has increased tremendously, creating a massive demand for rental housing.
With high property prices in metro cities, most migrants prefer rental properties. For residential properties, rental yields can range between 2.5% to 3.5% annually. However, commercial properties can offer significantly higher returns, with rental yields often exceeding 6% to 8% annually, depending on the location and type of property.
Even in non-metro cities, both residential and commercial properties can provide a substantial annual rental yield, making them attractive investment options. As per the conditions you set for the rental agreement, you can expect a fixed inflation-adjusted income on a monthly or quarterly basis.
Also Read: The benefits of investing in affordable housing
2. Diversification of Portfolio
Investing a part of your portfolio in real estate can help you diversify from traditional asset classes like equities, fixed-income debt, and gold and balance your portfolio's overall risk profile.
While the other asset classes are exposed to stock market volatility and interest rate risks, real estate market values tend to be more stable in the longer term. Prices may fluctuate in the short term but have shown a rising trend historically. Thus, one of the biggest advantages of investing in real estate is the ability to counter the volatility in the rest of the portfolio over the longer term.
3. Encashing the Commercial Real Estate Wave in India
India's technology sector is rapidly expanding, particularly in cities like Bangalore, Hyderabad, and Pune. With the rise of technology companies and increasing job opportunities, the demand for office spaces and warehouses is on the rise, driven significantly by the growth of e-commerce.
This surge in demand makes commercial real estate a promising investment opportunity. High rental yields in these tech-driven cities make them attractive for investors seeking steady returns from their properties.
With more startups and remote work, demand for shared workspaces is also increasing. Investing in co-working spaces to rent out desks or offices can be a lucrative way to make money in commercial real estate. In short, India's booming technology and e-commerce sectors fuel commercial real estate's growth.
Also Read: Why is Real Estate Investment in India the Most Profitable Option?
4. Tax Benefits
There are various tax benefits available for real estate investments in India. For example, you get benefits under the different sections (24, 80C and 80EE) of the Income Tax Act. You can claim the principal and interest components of your home loan EMIs as deductions under section 24. Please note that you can only claim up to ₹ 2 lakh per annum.
One of the advantages of investing in real estate is claiming capital gains tax exemption under section 54 on selling residential property if you reinvest the gains. You get an exemption of ₹ 1.5 lakh under section 80C (from being included in your taxable income).
Furthermore, you can also claim an additional interest deduction of up to ₹ 50,000 on your home loans under section 80EE of the Income Tax Act.
5. Hedge Against Inflation Risk
Real estate investments in India have historically proven to be an effective hedge against inflationary risks compared to most other forms of investment. While inflation can significantly erode the value of your assets, financial experts suggest that real estate tends to provide capital appreciation that exceeds the inflation rate over extended periods.
So, rising real estate prices can help you overcome the loss in value due to inflation. Your investment in real estate ensures the protection of not just your invested capital but also its value in the real purchasing sense.
6. High Possibilities of Capital Appreciation
Owing to the rapid development of infrastructure and the growing demand for housing in India, capital appreciation of real estate assets has been high over the past few years.
Property prices have been increasing, especially in urban centres. This has created significant wealth for real estate investors.
Though past performance should not be trusted as a guarantee of future returns, several structural factors, such as government impetus through schemes like Smart Cities Mission and Housing for All, are likely to drive capital appreciation in the real estate sector in India.
Even if the price rise appears sluggish during specific periods, regular rental income can provide decent returns on your investment.
Also Read: How to Make Profits from Real Estate Investment?
7. Pride of Ownership
Investing in real estate in India is not merely a financial decision but also a matter of personal and societal pride. Property ownership signifies status and financial accomplishment, especially in Indian culture. Whether it's a home for your family or a commercial property for business, the sense of ownership offers emotional satisfaction, making it one of the intangible yet significant real estate benefits.
8. Inflation Hedge with Dual Benefits
Real estate investment in India is an excellent hedge against inflation. Unlike other assets that may lose value during inflation, property prices and rental income typically rise, protecting investors' purchasing power. The dual benefits of investing in real estate include steady rental yields and significant capital appreciation over time, ensuring that your wealth grows even in an inflationary economy.
9. Opportunities in Emerging Markets
Emerging markets, especially in Tier 2 and Tier 3 cities, present lucrative opportunities for investing in real estate in India. These regions are witnessing rapid infrastructure development, creating high-growth potential for property investments. As affordability and demand increase, the benefits of investing in real estate in these cities include lower entry costs and higher future returns compared to established metro areas.
10. Sustainability and Green Real Estate Trends
One of the new-age real estate benefits in India is the rise of sustainable and eco-friendly properties. Developers are increasingly focusing on green buildings with energy-efficient designs and sustainable practices. Investing in real estate in India in such properties not only supports environmental goals but also enhances long-term value as more buyers and tenants prioritize eco-conscious living.
11. Leverage and Financing Advantages
One of the main benefits of real estate is the ability to use leverage effectively. Real estate investment in India becomes more accessible with affordable home loans and government incentives like tax deductions. This allows investors to amplify their purchasing power and acquire high-value assets with minimal upfront capital, making investing in real estate in India an attractive and achievable goal.
12. Tangible and Inheritable Asset
Unlike stocks or bonds, real estate is a tangible asset that provides both emotional and financial security. The benefits of investing in real estate include the ability to pass on this asset to future generations. Owning a property ensures long-term wealth and stability, offering your family a significant inheritance and financial support.
13. Commercial Real Estate in Non-Metro Cities
Non-metro cities in India are becoming attractive hubs for real estate investment in India. With the rise of remote working and regional business centers, properties in these areas offer promising returns. Investing in real estate in India’s non-metro cities can yield high rental income and capital appreciation, particularly in commercial spaces like co-working hubs and small business units.
14. Cultural and Tourism-Driven Investment Value
India’s rich cultural heritage and booming tourism industry create unique opportunities for real estate investment in locations with historical or tourist significance. Properties in such areas enjoy consistent demand for vacation rentals or boutique stays. The benefits of investing in real estate in these regions include steady income and appreciation, driven by a mix of cultural and commercial value.
Real estate investing provides multifaceted benefits like steady rental income, portfolio diversification, tax savings, a hedge against inflation, and significant capital appreciation over long periods.
With a prudent selection of location and type of property, proper entry, and holding period, you can optimise your returns on your real estate investment. Piramal Realty is one of the most trusted real estate brands committed to offering a gold standard in architectural design, quality, safety, and customer-centricity. Choose Piramal Realty as your trusted partner for real estate investing.
Frequently Asked Questions
What is the meaning of real estate investment?➕
Real estate investment involves purchasing, owning, managing, or selling property to generate income or capital appreciation. It includes various types such as residential, commercial, industrial, and land investments, offering both financial growth and asset security.
What are the benefits of investing in real estate in India?➕
The benefits of investing in real estate in India include capital appreciation, steady rental income, and tax advantages. Additionally, real estate acts as a hedge against inflation and provides a tangible, secure investment. Properties in prime locations also offer long-term value growth.
Is it good to invest in real estate now in India?➕
Yes, investing in real estate in India is highly favorable now due to rapid urbanization, infrastructure development, and increased demand for residential and commercial properties. With real estate prices steadily rising, it is a lucrative opportunity for long-term gains.
What is a major goal when investing in real estate?➕
The major goal of real estate investment is to generate consistent returns through rental income or capital appreciation while diversifying and securing one’s investment portfolio. It also aims to provide financial stability and a tangible asset that can be passed down generations.
What is the future of real estate in India 2025?➕
The future of real estate in India by 2025 looks promising, with increased demand for housing in urban and semi-urban areas, growing interest in sustainable and luxury housing, and favorable government policies. Real estate investment in India is projected to grow significantly due to these factors.
What type of real estate is the most profitable?➕
Commercial real estate is often the most profitable due to high rental yields and long-term lease agreements. Residential properties, especially in prime locations, are also lucrative, offering steady appreciation and rental income.
Is buying a property a good investment in India?➕
Yes, buying property in India is a solid investment due to rising property values, growing urbanization, and increasing demand for residential and commercial spaces. It provides long-term financial security and diversification of one’s portfolio.
Is real estate better than stocks in India?➕
Real estate offers more stability and lower volatility compared to stocks, making it a better choice for long-term investors seeking tangible assets. Stocks, however, provide higher liquidity and faster returns, making them suitable for short-term investment goals.
What are the 4 types of real estate?➕
The four types of real estate are:
- Residential: Homes, apartments, and villas.
- Commercial: Offices, retail spaces, and malls.
- Industrial: Factories, warehouses, and research facilities.
- Land: Vacant plots, agricultural land, and underdeveloped areas.
What is the return of real estate investment in India?➕
Real estate investment in India can provide returns ranging from 6-10% through rental income and much higher returns through capital appreciation over time. Factors like location, property type, and market trends significantly influence the returns.
Disclaimer- This article is based on the information publicly available for general use as well as reference links mentioned herein. We do not claim any responsibility regarding the genuineness of the same. The information provided herein does not, and is not intended to, constitute legal advice; instead, it is for general informational purposes only. We expressly disclaim any liability, which may arise due to any decision taken by any person/s basis the article hereof. Readers should obtain separate advice with respect to any particular information provided herein.
