Real Estate Emerges as Most-Preferred Investment Instrument

Good news for the real estate builders, who have been facing a slowdown in buying activities at least for the past 18-24 months. According to a report by Indian Ministry of Finance, a staggering rise of 40 per cent has been marked in the purchasing volume of properties worth more than Rs 30 lakh in fiscal 2006-07.

Inferences have been drawn that property and real estate has emerged up as the most preferred tool of investment among high Networth Individuals (HNIs) and upper middle class.

The Indian real estate builders are also keeping their fingers crossed over the emerging picture of real estate sales in the quarters between Oct-Dec and Jan-March, for FY 2007-08. The cut in home loan rates by all leading public and private sector banks from 50 to 100 basis points has also augured well for Indian property markets.

When they contacted Sanjay Chandra, the managing director of India’s second largest real estate developer- Unitech Group, he said, “Cut in interest rates combined with the onset of the festive season should boost residential property sales….

Those customers who have been postponing their buying decision in anticipation of interest rate cut are likely to come into the market now…”

Interestingly, the investor interest in India has been gradually shifting from equity, bonds and other financial instruments to real estate, owing to the way it has outsmarted the other investment options as far as returns are concerned.

Also, there was a dip in investor interest in Initial Public Offerings (IPOs), once most sought-after tool of making money in short term, between April 2006 and April 2007.

Nevertheless, the real estate builders enjoy the trends, and say that property investment not only brings you wealth but a sense of future security, as well. However, the biggest challenge that a Real Estate [] investor has to face is the near term fluctuations. It may happen that your property values go down by substantial levels due to some concerns on the fronts of infrastructure, economic meltdown, or other micro and macro economic issues, and you panic. A long-term perspective is thus, one should always bear in mind.

Source by George Gonigal

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