Real Estate Continues to Dominate as Top Investment Choice in India: FICCI-Anarock Survey
A recent survey by FICCI and Anarock reveals that real estate remains the most preferred asset class for investment among Indians, with 59% of respondents across 14 cities favoring it.
Real EstateInvestmentFicciAnarockProperty MarketReal Estate PuneOct 21, 2024
The survey highlighted that 67% of the respondents were looking to buy property for end use, while 33% intended to invest for financial returns. The most preferred budget segment for homebuyers was the Rs 45 to 90 lakh range, with 35% of respondents choosing this category. Additionally, 28% of the respondents preferred homes priced between Rs 90 lakh and 1.5 crore.
However, over 53% of homebuyers expressed dissatisfaction with current affordable housing options, citing issues such as poor location, subpar construction quality, and inadequate unit sizes.
Raj Menda, the chairman of the FICCI Committee on Urban Development and Real Estate and Chairman of the Supervisory Board at RMZ Corporation, stated, “India’s economic growth is driving rapid expansion in the real estate sector, with the residential market projected to reach $1.04 trillion by 2029, growing at a 25.6% compound annual growth rate (CAGR). This growth is fueled by rising demand for ultra-luxury properties and significant investments.”
Apartments emerged as the most preferred property type, with 58% of respondents choosing them. However, residential plots are gaining popularity, especially in southern cities. Furthermore, 57% of investors indicated that they would buy property to earn rental income, driven by surging rental rates in urban areas.
Pramod Rao, the executive director of SEBI, emphasized the importance of investor confidence for the industry’s long-term success. He stated, “Investor confidence is crucial, and SEBI’s focus on transparency and governance has been key in building this trust. Strong compliance and better disclosures will be essential in attracting institutional investments.”
Rao also highlighted SEBI’s initiatives, including a single dashboard data bank to streamline processes and efforts to convert real estate investments into tradable financial instruments, which will boost liquidity and accessibility.
There is a significant opportunity for the government to monetize its own assets, whether it’s a state government or a municipal corporation, Rao added. “Wherever there’s a revenue-generating asset, it can be housed in an Invit or a Reit. This has been successfully done by NHAI for road assets. By monetizing government assets without disturbing fiscal prudence, we can unleash more potential,” he explained.
Rao noted that more than 50% of Indians’ wealth is concentrated in the real estate sector, and globally, it is the largest asset class with a value of over $300 trillion. He cited that the assets under management (AUM) of 30 operational Indian real estate investment trusts (Reits) and infrastructure investment trusts (Invits) reached about Rs 6.5 trillion as of March 31, 2024. Moreover, 10 to 15% of the country’s Grade-A space is held by Reits focused on commercial real estate.
Frequently Asked Questions
What percentage of respondents preferred real estate as the most preferred asset class?
According to the survey, 59% of the respondents across 14 cities preferred real estate as the most preferred asset class.
Which budget segment is the most preferred for homebuyers?
The most preferred budget segment for homebuyers was the Rs 45 to 90 lakh range, chosen by 35% of the respondents.
What are the main reasons for homebuyers' dissatisfaction with affordable housing options?
Over 53% of homebuyers were dissatisfied with current affordable housing options, citing issues such as poor location, subpar construction quality, and inadequate unit sizes.
What is the projected value of the residential market in India by 2029?
The residential market in India is projected to reach $1.04 trillion by 2029, growing at a 25.6% compound annual growth rate (CAGR).
What initiatives is SEBI taking to boost the real estate investment sector?
SEBI is focusing on transparency and governance to build investor confidence. They are also working on a single dashboard data bank to streamline processes and efforts to convert real estate investments into tradable financial instruments, boosting liquidity and accessibility.
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