According to several studies, prices have gone up by approximately 10.5% in the Indian residential real estate market over the last year. This contradicts the general view that real estate has been facing a major crisis in India to some extent. As per reports, growth in the mainstream Indian real estate market has put the country amongst the top 10 global markets for the last 12 months till June, 2017 as per reports.
According to some experts, average returns from real estate have been between 12-14% over the last five years or so. Returns are dependent on several aspects like the market conditions, the location of the project, construction quality and more. Micro markets and some cities perform better than their counterparts due to higher creation of jobs, a robust commercial sector, relative affordability and better connectivity and infrastructure.
According to experts, strategic micro markets in cities like Pune, Mumbai and Bangalore have seen returns between 15-18% which is excellent to say the least while some micro markets have yielded just 1-2% as returns which is dismal. Returns vary across the country and residential prices increased more across some tier II cities in the last year while metros and tier I cities had lower appreciation in real estate prices. Kochi is one of the cities which witnessed above average appreciation along with Kanpur. However, these returns will not stay the same every year.
Real estate has always been a favored avenue for investments but lower returns have led to it being tagged as an unattractive investment sector of late. However, measures like RERA and demonetization have cleaned up the sector to a large extent although they were the major reasons behind a temporary slowdown over the last year and mid-2017. Choosing the right property is paramount for getting better investment returns. With good policy measures, investors can certainly look forward to getting returns which are higher over the next five years or so as per experts.
