In the 20th & 21st century, the world had witnessed five major economic & financial crises. The Financial Crisis of 2007–08 of the 21st century where India emerged as a strong economy and remained resilient amidst global downturn. Currently, India is one of the major economies of the world and is strongly poised to survive the pandemic-induced global recession.
According to a recent report analysis from the United Nations Conference on Trade and Development (UNCTAD), the world economy will go into recession (with the likely exception of India and China) due to COVID-19 crisis. India with strong economic fundamentals, large domestic consumer market and one of the biggest working-class population in the world economy will probably able to duck this global recession.
Every economic crisis always provides investment opportunities to all, but wise investors can make those tough decisions. And we cannot help but recall a quote by legendary investor Warren Buffet which is apt for the current situation. “Be fearful when others are greedy and be greedy only when others are fearful”.
This quote begets a question- Is it the right time to buy or invest in real estate? The answer is a resounding Yes.
Why? Let’s get into these facts. If you look at the current situation of the equity market or mutual funds, they are in shambles. Market risks are high and off-selling by investors is at an all-time high. On, the other hand, investment in real estate is always considered as the most secure investment in the world. Amidst coronavirus outbreak, it is an opportunity for all investors to rejig their investment portfolio and move to real estate investment as it is a safe haven for all investors.
Here is the list of probable reasons why investors should consider their investment in real estate amid COVID-19 pandemic situation.
Reduction in Repo Rates: The recent announcement made by the central bank to cut repo rates by 75 basis points will result in a reduction in lending rates at which banks provide housing loans to home buyers. Certainly, post-reduction in repo rates, the housing loans available currently in the market is close to the 2008-09 level of 7%, which spurt the real estate demand at that time. It is considered that low-interest rates will propel positive sentiments among the serious prospects of real estate properties.
Countrywide residential real estate has remained stable in recent years as compared to other asset classes. According to Square Yards Research data, housing prices in top eight cities across the country rose by 5.6% on average in 2018, weakest since 2010. It is expected that house prices to rise by 1.8% in FY20 and 2% in FY21. Buying a residential property in this opportune moment from any reputed developers is an attractive buy option. Residential properties are available at as low as the launch price.
Demand and supply gap: Undoubtedly there is low demand in the market for real estate. If you look at the brighter side of this low demand, it encourages discounted prices on high-quality residential projects. Gradually demand will rise, and prices of the residential properties will shoot up. Post lockdown, this bargain will diminish once the economy stabilizes and a wise investor never misses an investment opportunity.
And who wants to lose a golden opportunity to create a source of passive income when investment opportunities are available as low as INR 5 lakh with rental income.
