Investment opportunities in the real estate sector

Real estate is an asset class that can deliver handsome returns on a long-term basis. With the real estate sector flourishing, the pace of investment in the sector has increased tremendously. The expansion in real estate investment can be attributed to various factors such as significant inflow of foreign funds, liberalized legislative framework, constantly increasing purchasing power, growth of customer friendly banks and other financial institutions, and tax reform measures.

Some investment opportunities previously restricted to Indian residents are now also open non-resident Indians (NRIs). Developers, builders and investors are exploring opportunities to invest in various segments of the real estate sector, including residential property, plots of land for residential, commercial and office space, retail outlets, and industrial and hospitality properties. However, the major real estate developments in India are mainly townships, residential units, shopping malls, offices, retail stores and commercial complexes. The latest entrants in the sector are information technology spaces such as IT parks and integrated townships in such IT parks.

Avenues for investment

Lucrative areas of investment are basic rental properties where the landlord is responsible for paying the mortgage, taxes and costs of maintaining the property and the tenant is charged enough rent to cover all of these costs, in exchange for being in possession and making use of the property.

Amitabh Chaturvedi is the managing partner of Mine & Young, where Ekta Sukhramani is an associate.