High returns from real estate investment

[Kerss87]

Returns from real estate investment are still among the highest in the world. As a result, there is a huge spurt in the number of investors in the real estate market. With the stock market being highly volatile, investment in real estate has begun to look competitive with 50% - 100% yields.

However, specific return is always linked to property specific factors, dynamics of real estate market, and the overall economic performance. If we combine the returns with the appreciation rate, real estate provides almost 50% more returns than that of most other investment options. All these factors have attracted private equity players and the other real estate funds from abroad. Apart from this, existing and new players in the development business are eyeing viable and profitable projects. Obviously, a potpourri of market savvy players and better returns’s driving the trend.

The biggest driver of Real estate Kochi market is the booming IT and ITeS segment. With lower operating costs being the driver here, they have moved from central business districts to suburbs to Class I & II cities. The market is expected to continue to grow thanks to the interests of IT and ITeS companies which are setting up their bases. Expansion plans and disaster recovery centers are driving the office market in Tier II and Tier III cities.

This is because the real estate market in Tier II and Tier III cities is growing at an alarming rate. Tier I cities are already saturated, and, have reached a good appreciation point. There are many unexplored opportunities in the urban cities and the people living there have good amount of disposable income and good standard of education.

After 100% FDI was allowed in real estate in February 2005, the residential market got a major boost. The FDI in residential projects has led to a spurt in 100-acre plus townships all over India.