Buy land, they’re not making it anymore.
- Mark Twain
Land/real estate adjusted for inflation has just given a 0.5% return in the last century in the US markets. Also, the maximum return/increase in real estate prices was observed during the Post 2nd world war era when there was a genuine spurt in demand for housing by the War-returned soldiers. So, if you are investing in real estate at the wrong timing, you may fail to see any appreciation at all for all your life.
Real estate in India is too see a radical change in the next few decades. While, the demographic dividend and the young population is likely to play on the demand side, the supply side is equally buoyant helped by SEZs planned and Malls percolating to the tier-2 and tier 3 cities. With the integration of economies (rural & urban), development of infrastructure (Highways reducing time to commute) and increasing digitalization, demand led growth in the metros is likely to be low as compared to that in the non-metro cities. The initial leg of growth in real estate has been fuelled by the IT boom with IT hubs like Bangalore, Hyderabad, Pune and Gurgaon. Further growth is likely to be centered in areas of Manufacturing and Consumption. Cities like Nashik, Indore, Vizag, Ludhiana, Lucknow and Nagpur are likely to do well in the near future.
The buoyancy in the Indian real estate is also likely to come out of setting up of real estate Mutual funds which may be in place in the next 12-24 months. The Real estate related financial instruments are to create an artificial demand (investment relate demand).