High returns

According to a recent study, returns from rental incomes on investment in commercial property in metros, is around 10.5%, the highest in the world. Real estate in India is now considered as one of the hottest investment options as compared to bank deposits or bonds where your return ranges between 5.55 to 6%.

Revived demand since 2004 has led to the firming-up of real estate markets across the commercial, residential and retail sectors. The supply just about matches demand in almost all metros around the country and there has been an upward pressure on the real estate values. Due to the heavy demand and upward prices, investment and speculative interest in real estate is growing while excess money supply, stock market gains and policy changes are adding to the trend in favor of the real estate sector.

In the last one year the capital values of the commercial office spaces has increased by up to 40% owing to the increase in the demand from IT / ITES and BPO sector across major metros in India.

Low interest rates

Lower interest rates, easy availability of housing finance, growing salaries and job prospects have given a boost to the residential sector. The net yields (after accounting for all outgoings) on residential property are currently at 4-6% p.a. However, these investments have benefited from the improving residential capital values. As such, investors can count on potential capital gains to improve their overall returns. Capital values in the residential sector have risen by about 25-40% p.a. in the last 2 years.

The retail market in India has been growing due to increasing demand from retailers, higher disposable incomes and shortage of quality space as on date. The capital appreciation in this sector is close to 20-35% p.a. However, the risks associated with this sector are higher as retailers are prone to cyclical changes typical in business. Changing consumer behavior combined with increasing disposable incomes will ensure further growth of the retail sector in India.

Safety regulators

In today's political scenario, India has positioned itself as one of the best places for real estate/realty investments. The reason behind this development is India's flexible FDI policies and open system with social and political safety regulators, and a conducive environment that provides comfort, long-term stability and security to foreign investors for personal as well as business investments.

The positive outlook of Indian government is the key factor behind the sudden rise of the Indian real estate sector, the second largest employer after agriculture in India. This budding sector is today witnessing development in all area such as - residential, retail and commercial in metros of India such as Mumbai, Delhi, Kolkata and Chennai. Easier access to bank loans and higher earnings are some of the pivotal reasons behind the sudden jump in the real estate sector.

Continuously promising

The Indian property market is immensely promising and most sought after for a wide variety of reasons.

Booming economy • The ever-growing economy is on a continuous rise with an 8.1 percent increase witnessed in the last financial year. The boom in economy increases purchasing power and in a country like India, where owning a house is tantamount to finding the Promised Land, this creates a real demand for the real estate sector.

Graduates in need • India is going to produce an estimated 2 million new graduates from various Indian universities during this year, creating demand for 100 million square feet of office and industrial space.

Fortune 500 companies • Presence of a large number of Fortune 500 and other reputed companies will attract more companies to this country thus creating more demand for corporate space.

Huge dividends • Investment in India yields huge dividends. 70 percent of foreign investors in India are making profits and another 12 percent are breaking even.

Attracting foreign investors • Apart from Services & Business Process Outsourcing, India has shown its expertise in sectors like auto-components, chemicals, apparels, pharmaceuticals and jewellery where it can match the best in the world. These positive attributes are going to attract more foreign investors in the near future.

The relaxed FDI rules implemented by India last year has invited more foreign investors and the real estate sector is seemingly the most lucrative ground at present. The revised investor friendly policies allowed foreigners to own property, and dropped the minimum size for housing estates built with foreign capital to 25 acres (10 hectares) from 100 acres (40 hectares). With this sudden change in investment policies, overseas firms can now put up commercial buildings as long as the projects surpass 50,000 square meters (538,200 square feet) of floor space.

There is no better time to invest in property in India.