Why should you invest in residential real estate during the Covid pandemic?


The second wave of the novel coronavirus has disrupted almost every sector of the economy. During this time, is it right to invest in real estate is a question that many of the investors would like to get answered. As far as real estate investments are concerned, a successful investment is obviously identifying the asset and evaluating the price cycles. But more importantly, it is about crystallizing the right investment thesis at the right point of the cycle. 

According to industry experts, real estate stands more promising than the volatile stock market and underperforming mutuals during the pandemic days. This situation has been a major concern for investors eyeing mutuals and stocks as they are forced to search for a stable asset class for investment during the crisis days of Corona. For them, residential real estate happens to be the best asset class for investing. Let’s go ahead and check some factors that augment your thought.

Supply-side factors are impacting favourably

Residential real estate has evolved and established as a buyers market, and furthermore, investors and end-users get lower interest rates and even avail moratorium for home loans. Banks, as we all know, are more structured and positioned to lend more money, thanks to the ease of norms as well. The benevolent tax regime has become a highly lucrative model for investors and end-users to leverage tax benefits. All these factors are underlying that as an investor, you can have less speculative fears surrounding investment in residential real estate during corona.

Multiple choices to diversify the portfolio

The residential investment portfolio has become so diverse with the evolution of the multicategory of homes available for investment. There are budget mid-segment homes, affordable luxury apartments, uber-luxury, and spacious apartments, luxury low-rise apartments and ultra-luxury secluded villas, and much more for investments. Major real estate developers have spread themselves across multiple categories. However, a major chunk of them is focused on affordable and mid-segment housing opening greater avenues for diversifying your investment portfolio.

Record low interest rates on home loans

The Reserve Bank of India has reduced the repo rates on multiple occasions to record the lowest dip. As a prudent investor, it is highly advised that you should not let off this opportunity to diversify your investment portfolio. In case of an unprecedented lockdown, the banks have also offered moratoriums for home loans which will fetch end-users more time. However, these repo-linked home loans are subject to terms and conditions based on factors including credit scores. Just cross-check your eligibility for home loans with your nearest authorized bank before investing in properties.

Favourable demand-side attributes

The demand side attributes are also favouring the residential real estate sector. During the earlier crisis periods, our property market was overheated to result in higher valuations, the loan to value ratio was declining and the interest rates were significantly higher considered to the present period. On the contrary, today we have lower valuations, cheaper credit availability, and higher loan to value ratio to boost the investment opportunity. The price benefit with softening prices and easy availability of home loans with lower interest rates have actually enabled the investors and end-users to create the demand. Altogether, buying a home looks pretty much on the safer side during the pandemic to diversify your portfolio.

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