Investment Opportunities in India

April 26, 2013

Scenario of real estate sector in India

The Indian real estate sector has witnessed significant growth in the past few years and is expected to grow at the rate of 30 per cent in the coming years. The sector has emerged as one of the most appealing investment sectors for domestic as well as foreign investors.

The major factors responsible for growth in the sector are increasing purchasing power, favourable demographics, existence of customer friendly banks & housing finance companies, professionalism in real estate and favorable reforms initiated by the government to attract real estate investments.

Growth prospects

The Indian real estate market size is expected to touch US$ 180 billion by 2020. In fact, the demand is expected to grow at a compound annual growth rate (CAGR) of 19 per cent between 2010 and 2014, with tier I metropolitan cities projected to account for about 40 per cent of this.

Investment opportunities

At present, investment trends in India are showing a huge number of NRIs investing in Indian real estate sector.

India needs to invest US$ 1.2 trillion over the next 20 years to modernise urban infrastructure and keep pace with the growing urbanisation, as per a report released by McKinsey Global Institute (MGI)-India’s urban awakening.

Growing infrastructure requirements from sectors such as education, healthcare and tourism are providing numerous opportunities in the sector. Further, India is going to produce an estimated two million new graduates from various Indian universities during the year, creating demand for 100 million square feet of office and industrial space. In addition, presence of a large number of Fortune 500 and other reputed companies will attract more companies to initiate their operational base in India, thus creating more demand for corporate space.

FDI in Indian real estate

Construction development sector (including townships, housing, built-up infrastructure & construction-development projects) has attracted a cumulative foreign direct investment (FDI) worth US$ 22,007.67 million from April 2000 to February 2013, according to the Department of Industrial Policy and Promotion (DIPP).

In addition, the sector is set for robust inflows of US$ 4-5 billion from overseas investors in the next couple of years, with Bangalore, Delhi and Mumbai emerging as the favourites, as per Jones Lang LaSalle, a global real estate consultancy giant.

Government initiatives in the sector

The Government of India (GOI) has allowed FDI up to 100 per cent under the automatic route in townships, housing, built-up infrastructure and construction development projects to increase real estate investment, generate economic activity, create new employment opportunities and add to the available housing stock and built-up infrastructure.

The Reserve Bank of India (RBI) has granted permission to foreign citizens of Indian origin to purchase property in India for residential or commercial purposes. Further, the government is also committed to introducing FDI in multi brand retail, introduce changes in the existing SEZ policy to resurrect developer interest and expand the role of the private sector in infrastructure development.

Tax Advantages

People can avail huge tax benefits on investing in real estate:

  • Tax exemption is available on re-investment of sale proceeds of property in eligible possibilities
  • Tax benefit is available on interest on housing loan raised in India
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August 23, 2011

Study the Investment Trends and Reap Huge Gain

If it is anything related to getting financial security then investing is the wisest and the most important decision to be considered. It is better to initiate the investment practice as early as possible, as that is how the money will multiply to a huge amount along with you ageing gracefully. Nowadays most of the Indian youth draw quite a hefty sum of money and all the credit goes to the industrial sectors comprising Information Technology, ITES , BPO and similar others which are creating great opportunities with each passing day. This is turn creating options for the mass to save more money and invest them in proper channels. Investment is indeed a crucial element and hence, one should study the prevailing Investment Trends before investing in a particular sector, as the main aim should be balancing the risk and the returns. The basis of investment should be very authentic as often people avail the option to invest in the private firms considering the lucrative offers of high interest rates and so on but it might be the case within a while the firm vanish altogether leaving the individual tormented by losing all the money invested. Here are few tips for the individuals, who are fresh in the investment arena.

Life Insurance
The Indians take the option of investing in insurance very seriously and the organisation, on which they depend to the utmost, is the Life insurance Corporation of India (LIC). This is an undertaking of the Government of India and is the undaunted market leaders in the field of insurance in India. The other popular market players include Tata AIG Life, HDFC Standard Life, Bajaj Alliance Life Insurance, Kotak Mahindra, Birla Sun life, Aviva Life Insurance and several others.

Bank Fixed Deposits
If you will study the Investment Trends over a favourable period then you will find that one of the commonest methods of investment is put your money secured as Fixed Deposits (FD) in bank. This kind of investment comes with little risk but at the same time the rate of return is also not very high. The tenure offered by various banks range from 15 days to 5 years. Every bank including the nationalised, private and co operative banks have options for fixed deposits. The schemes offered for FDs are also many and have features such as, auto renewal, free credit card with FD, cash certificate, easy FD and many others.

Gold
If someone is looking for long term investment then investing in Gold is one of the best options. The average rate of appreciation for Gold every year is 17% approx. And even when the rate of inflation ranges from 4%-6% then also Gold tend to yield great returns. It is always wise to invest in Gold coins or Gold bonds, as Gold in form of jewellery might lead to wastage of money in making charge of the ornament.

Real Estate/Property
At present the prices of property is doubling up in 2-3 years. Therefore, it is safe to invest in property as it will provide good return. So, if one can buy individual house or flats in prime areas or even in suburbs, then the value will surely get appreciated during the next few years. So buying properties in the major metros, such as, Delhi, Mumbai, Kolkata, Chennai, Hyderabad, Kochi and the such others is a wise way to invest.

Shares and Mutual Funds
This is one of the risky options to invest but often yield high returns. It is better to study the market trends and collect the information on the company one is investing in. Investment in shares gives the option of Investment in Indian Businesses.

The other popular options include investing in Postal Saving schemes, National saving certificates and in Public Provident Fund and in bonds, company FDs, chit funds and others.

The recent trends in the investment scenario reveals that majority of Indians are in taking up FDs, real estate, life insurance and even Investment in Indian Businesses as the common investment purpose.

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