Real Estate: A Popular Hedge Against Inflation
Real estate investments can generate rental income, which potentially grows over time in response to inflation, making it a popular hedge against inflation.
Real EstateInflationHedgeInvestmentAnarockReal Estate NewsJun 13, 2024
Real estate investments can generate rental income, which potentially grows over time in response to inflation. As the cost of living rises, landlords typically adjust rental rates. Also, investors can leverage their real estate assets to borrow funds for further real estate acquisitions.
In the last decade, there were periods when the supply of real estate exceeded demand, resulting in stable price growth that kept pace with inflation in the pre-pandemic era. Between 2013-2020, the top 7 cities recorded a cumulative supply of 23.55 lakh units against a demand for 20.68 lakh units. Gradually, demand rose in tandem with new supply. Available inventory peaked at approx. 8 lakh units by the end of 2016. However, following the pandemic, residential real estate saw rapid recover, leading to significant price growth that has outpaced general inflation.
Shobhit Agarwal, MD & CEO – ANAROCK Capital, says, “After the 2019 elections, average residential prices across the top 7 cities have appreciated at a Compound Annual Growth Rate (CAGR) of 6% – rising from Rs 5,600 per sq.ft. in June 2019 to Rs 7,550 per sq.ft. by the end of FY 2024. A similar trend was witnessed in relation to the 2014 elections. Average prices across the top 7 cities saw an annual rise of over 6% in 2014 when compared to the preceding year – from Rs 4,895 per sq.ft in 2013 to Rs 5,168 per sq.ft. in 2014.”
ANAROCK is a leading real estate services company in India. Shobhit Agarwal is the MD & CEO of ANAROCK Capital.
ANAROCK research has said in its report that real estate investments can generate rental income, which potentially grows over time in response to inflation. As the cost of living rises, landlords typically adjust rental rates. Also, investors can leverage their real estate assets to borrow funds for further real estate acquisitions.
Frequently Asked Questions
How has real estate performed in the last two years?
Residential real estate prices have appreciated at a CAGR of 13% in the last two years.
How does real estate investment help against inflation?
Real estate investments can generate rental income, which potentially grows over time in response to inflation.
What is the relationship between demand and supply in the real estate market?
In the last decade, there were periods when the supply of real estate exceeded demand, resulting in stable price growth that kept pace with inflation.
How has the pandemic affected the real estate market?
Following the pandemic, residential real estate saw rapid recover, leading to significant price growth that has outpaced general inflation.
What is ANAROCK?
ANAROCK is a leading real estate services company in India.
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