6 Reasons why you should invest in real estate

By LODHA

Real estate as the name alludes to is "real". A tangible asset, it provides a sense of stability, safety and security. Buying your own home is often a sign of financial bearings of a person. In the last couple of years, we learnt the value of having a own home that safeguards us against the unforeseen circumstances, while providing a safe harbour to loved ones. Increasingly, there is a demand for homes that offer better life with infrastructure and amenities to ensure holistic well-being. Real estate investment comes up with a lot of benefits. Let us understand them in detail:

- Safety, security & better life
Having an own home, is often considered a sign of stability as it provides a sense of safety and security. This is one of the reasons why real estate is one of the most popular investment options in India. Living in a house not only gives the freedom to do anything but also provides privacy and protection to the family. It assures a better life for loved ones, a place where their physical, emotional well-being is met. With COVID-19 pandemic home became centre of our lives. It made people realise the importance of having own home in an integrated development which provides a better quality of life by offering world-class amenities, open spaces, lifestyle & leisure facilities, basic conveniences and good service.

- Asset for lifetime
The value of real estate consistently increases over time. It is a tangible asset for a lifetime that can be laid out for rent, for living or even mortgaged as collateral in times of need. Besides this, real estate is permanent and not vulnerable to fluctuations, unlike the stock market. Residential real estate has long being considered as a wealth generating asset. Factors like limited supply of land, increasing population, migration to urban areas will further boost the prices.

- Tax benefits
There are many tax benefits associated with real estate in India both on self- occupied as well as property given on rent. You can claim tax deduction on the principal and interest component of the loan amount as well as in case of rented out property, taxes levied by local authorities.

- Among the safest investments you can make
Real estate investment is among the safest investment to make especially for first- time investors. It is a risk-free investment and has a low correlation with other major assets. It is a tangible asset, not prone to market volatility. A study by Jordà-Schularick-Taylor Macrohistory Database funded by the Institute for New Economic Thinking (INET) pegged that residential real estate provides better long term investment compared to equity.

- Passive Income
Real estate is also a source of passive income in terms of rental income. Rental income is considered one of the best sources of income. This fixed income may be used to meet expenses, pay off EMIs, etc without having to do anything. With the Model Tenancy Act approved by the cabinet we will see much needed transparency and structure in the renting segment, it will also result in speedy dispute resolution. This will further boost investment sentiment. Furthermore, as per reports the difference between rental yield in the country and the interest provided by banks on FD is narrowing gradually, which makes real estate a lucrative option.

- Portfolio diversification
Investment in real estate can generate rental income and can also upgrade your portfolio by decreasing volatility through diversification. It aids in building a risk management strategy. So if you have investments in different asset classes, real estate can be a hedge as well as diversification to your portfolio.