We, Indians, hold our traditions and cultural beliefs very close to our hearts, finding significance in the rituals that shape our lives. The auspicious festival of Akshaya Tritiya, falling on the third day of the Hindu month of Vaishakha, carries a sacred message of prosperity and success. Hence, purchasing gold on this day is considered to bring good returns in the long run. Traditionally associated with gold purchases, this festival has evolved into a day for forward-thinking investments.
Initially, people turned to gold for financial growth, transitioning from physical holdings to gold ETFs and bonds. Real estate is now undergoing a similar transformation. No longer confined to traditional house purchases, fractional ownership of commercial real estate is now emerging as the preferred choice. This shift signifies a new era of investment strategies, where the benefits of fractional ownership—accessibility, diversification, and potential for higher returns—are leading to increased investor interest.
Also Read: Real Estate: How fractional ownership is redefining the rules of investing for small investors?
As we honour tradition while embracing innovation, Akshaya Tritiya is recognized as a symbol of development and an auspicious day to seize the opportunity of investing in a brighter future. Here are some factors you should consider when investing in real estate.
Residential vs. commercial properties
One of the fundamental decisions that investors need to make is whether to invest in residential or commercial properties. Residential properties cater to both homeowners and investors looking for rental income. However, residential properties may pose challenges in tenant management and offer lower rental yields compared to commercial properties.
A recent industry report indicates that there has been an increase between 13 and 33 percent in housing prices over the last three years across seven major cities, whereas prices of commercial real estate markets have witnessed a significant appreciation of 15 percent for the same period.
Commercial properties, such as grade A office spaces offer good rental yields ranging between 8-9 percent as compared to 2-3 percent across residential properties. This allows investors to benefit from verified tenants and eliminate certain risks associated with residential properties.
Also Read: Building your FY 2025 portfolio? Here are 5 real estate investment options
Fractional ownership opportunities
As we know, Akshaya Tritiya holds significance for long-term real estate investments. This day is deemed ideal for acquiring items of value, with a belief in their potential to bring prosperity and good fortune. Moreover, the current shift in the real estate investment scene in India mirrors a “mutual fund” moment, marked by regulator’s confidence in fractional ownership of commercial real estate.
Regulatory backing from SEBI for Real Estate Investment Trusts (REITs), including the establishment of guidelines for Small and Medium REITs (SM REITs), signifies a turning point for investors and has further boosted their confidence. These developments democratise real estate investment, allowing retail investors to participate in high-value properties through fractional ownership. With a reduced minimum investment threshold to INR 10 lakhs, real estate investment becomes more accessible, aligning with the spirit of the festival as a day of prosperity and abundance.
Benefits of investing through the fractional ownership route
Fractional ownership of real estate allows the investor with a variety of returns, including regular income, asset security, liquidity, tax advantages and ease of ownership, among others. This is a great alternative for investors who are interested in income-yielding investments as well as those who would like to benefit from capital appreciation.
Also Read: Income tax strategies for real estate investors: Maximising deductions and minimising liabilities
Navigating regulatory and legal frameworks
Real estate transactions involve complex regulatory and legal frameworks that vary depending on the location and type of property. Investors must ensure compliance with all legal requirements and conduct due diligence to verify the authenticity of property titles, approvals, and ownership records. Seeking professional assistance from legal experts or real estate advisors can help investors navigate these complexities seamlessly.
Evaluating long-term growth potential
While short-term gains may be enticing, investors should prioritise long-term growth potential when investing in real estate. Assessing factors such as infrastructure development, urbanisation trends, and demand-supply dynamics can provide insights into the future appreciation potential of the property. Investing in emerging markets or growth corridors with robust economic fundamentals can yield substantial returns over the long term.
Also Read: What legal obligations exist for landlord access to rented premises?
In summary, investing in real estate during Akshaya Tritiya offers a compelling opportunity for individuals seeking to grow their wealth and secure their financial future. Implying on these measures, investors can make informed decisions and capitalise on the auspiciousness of this occasion to voyage on a successful real estate investment journey.
Shiv Parekh, Founder & CEO, hBits
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Published: 10 May 2024, 09:13 AM IST