Find out why a Real Estate Investment is favourable in the current times
The long stay at home and months of seclusion have become the new way of life and that’s the best we can do to defeat an enemy like the Coronavirus. But, the loss due to this pandemic has been insurmountable. A few days have been enough to take away thousands of lives and disrupt economies worldwide.
The lockdowns imposed have brought all sorts of economic activities to a halt. The result of which is the immense drop in the figures of the equity market that has shaken the confidence of investors. It is just in the past two months, that the equity market has been impacted drastically, suffering a whopping drop of almost 40%. Amidst such chaos and economic declines, the strand of hope for the investors has been the real estate market.
Here’s why investors should look forward to investing in the real estate sector as other asset classes lose value at the time of the COVID-19 pandemic.
The deficit demand for real estate in the market has caused developers to come up with attractive offers. With low rates, lucrative payment offers and additional offers have caused the property rates to become more affordable.
Reduction in Repo Rate
As per the latest announcement done by RBI, the repo rate was reduced by 0.75% and the new base rate is set at 4.4%. This has made the prospects for home seekers very favourable as the drop in interest rates makes it possible to buy a home right now. Also, with the same EMI, one will be able to avail higher loan eligibility for their house.
As real estate is a source of passive income, once invested in a property one can then enjoy the benefits of earning a rental income. This becomes an opportunity for investors to create a separate asset class in their portfolio.
Not as volatile as the share market or an investment in commodities
As the stock market suffers a downward trajectory, the impact on the commodity market has also been heavy. Prices of industrial commodities led by copper, Brent crude and rubber declined upto 9% in less than two weeks. On the other hand real estate prices have not fallen as low as the other asset classes, thus proving real estate to be the safest investment option.
Safety of one’s own home
The turmoil and chaos due to the current situation have well established that owning an apartment is way better than living in a rented apartment. In such times of instability, rental payments can turn out to be a burden financially. Apart from that, living in one’s own home can provide emotional stability and security.
Loan Availability and other protections
Another benefit that the real estate sector enjoys is the higher loan availability as compared to stocks and commodities. This is because real estate prices do not fluctuate as rapidly as the other asset classes. Even the margin requirement for real estate is low which is 70%-80% in case of LAP or housing loan.
Protections, benefits and future possibilities
Acts like RERA(Real Estate Regulatory Authority) and REIT(Real EState Investment Trust) have further secured the process of owning a property by introducing regulatory provisions leading to greater transparency and credibility in dealings.
So as you see, the reasons favouring the prospect of owning a property in the current scenario are many, one must not forget to consider the future possibility of “Work from Home.” It is not far when such a work life pattern and lifestyle will be adapted by many.
To conclude, it could be said that real estate is indeed a robust asset class that offers competitive risk-adjusted returns with less principal-agent conflict and attractive income streams. One must seize the benefits that the current opportunity provides as it is correctly said, ”Strike the iron when it is hot”.But it is only after choosing the best proposition for oneself and having taken expert advice that one must make a move towards booking a dream asset.