Real Estate: Investment and Wealth Creation

Traditionally, most investors have trusted the stock market as an avenue to pool in their hard-earned money. While stocks are a well-known investment option, not everyone knows that buying real estate is also considered an investment. Under the right circumstances, real estate can be an alternative to stocks, offering lower risk, yielding better returns, and providing greater diversification. Investing in real estate or stocks is a personal choice that depends on your financial situation, risk tolerance, goals, and investment style.

Real estate investing involves the purchase, ownership, management, rental and/or sale of real estate for profit. It includes data driven solutions like Data Collection, RE Monitoring, Performance and Benchmarks, Fundraising, Investor Reporting, and much more.

Real estate assets are typically very expensive in comparison to the other widely available investment options. Unlike stock and bond investors, real estate owners can use leverage to buy a property by paying a portion of the total cost up front, then paying off the balance, plus interest, over time. Investments in real estate deliver returns in two ways - capital appreciation and rentals. Investing in commercial real estate is not as difficult as it may appear. This is because commercial properties have certain standards that the owner or builder must observe when constructing a business.

For retail investors, the key considerations for investing into commercial assets should be thorough assessment of their risk appetite, investment horizon and the purpose of investment (rental return, long-term investment and diversification). In addition, location of the project, micro market performance, project quality, lease covenants (rent, escalation, lock-in period, etc.) and bench-marking should be part of the due diligence process. Also, one should see whether the micro market is preferred by a diverse occupier mix or a specific industry. This is particularly useful if the investment is in an upcoming commercial project with no pre-leasing activity. At the end of the day, it is a trade-off between risk and return.

Options available to participate in commercial real estate can be shops, offices, land parcels and real estate investment trust (REITs). Commercial properties yield 8-10% in major Indian commercial markets depending on factors such as location, demand-supply dynamics, quality of asset and maintenance. Currently, the commercial market is on an upswing with strong demand momentum and leased options are at a premium. The commercial property market is forecast to remain robust with ~35 Mn sq.ft of average absorption in the next couple of years. If you have an appetite for commercial real estate and are looking for long-term investment, this is the sector for you.

If you have been considering the real estate industry, there is no need for you to hold back any longer. This is an industry that you can be successful in if you are motivated. No need for years of education, or even a great deal of money to get you started. With minimal education and money, you can get started in the real estate industry and be on your way to making money. Why not get started today and join the best industry that there is!