The Hedge Against Inflation of 2018 - An Opportunity For NRI's
A thorough scrutiny of the real estate industry in India reveals that the economy had been through a bumpy ride after which a gradual resurgence is visible. Since RERA (Real Estate Regulations and Development Act); the anti-profiteering provisions made by the GST, albeit the short-term disruption creating demonetization in the economy, the new processes have also instilled a sense of transparency between home-buyers and builders.
On one hand, where the value of the Indian currency took an ever-so-long dip causing the property purchase trends to take a negative curve, on the other hand, consumers seem more confident about the Indian regulatory system than before. Thanks to RERA, small builders and big developers have paced up their project completions and diverted their focus from future and on-going projects to ensuring the timely delivery of current-completed projects. While the small builders are bearing the hard brunt of the evolving regulations, big developers are welcoming the changes with confidence since the amount of importance their consumers' have realized in laying down the foundations of trust and transparency.
NRIs always prefer properties in the right location, with a luxurious layout and good price. There's a surge in the amount of returning NRIs for real estate investments since they've calculated the possibilities of a further rise. The Indian regulatory systems are working towards creating a trust inducive economy, the fruits of which are initially being enjoyed by the upper-class who can afford luxury living, after which the forecast seems to be in favor of the larger audience. It is only at a click of a button that all information is available to the consumers always. Several micro- markets within the boundaries are still recovering from the upheaval but times are changing since under construction properties will always remain cheaper in comparison to the ready possessions.
A certain amount of pressure can also be seen on the consumers who are in two-minds since now they will have to decide & lock interest rates and drive the wheel further to more investing options. Through our analysis, it seems clear, even though local markets and picking from the fall and rising yet still, a huge opportunity awaits NRIs.
Real estate investments are seldom called a hedge against inflation. During inflation the cost of living notches higher. You will also demand an increased rental, but the mortgage payment amount remains the same. This will only increase your cash flow. Going forward, we will see the velocity of sales and transactions will have picked up since the demand for real assets from sophisticated investors will remain perpetual. We are already seeing a lot more institutional capital flowing into the sector, as well as the first movers of global funds leading to the consumer funds deployment.
While we don’t expect a dramatic surge in the prices in the short-medium term, Mumbai remains an excellent long-term investment asset class. With RERA holding the strings of the market and directing to an economic equilibrium, real estate as an asset class is currently in favor of home-buyers and remains as the most profitable investment option compared to the parallel asset classes.