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Why Real Estate is a Golden Investment ?

by Yashwant Kumar 11 Mar 2023

Real estate is one of the most sought-after investment gold mines. The real estate market involves buying, selling, renting and leasing of lands, pre-built properties and resale properties for commercial, industrial and personal household usage. 

The global real estate market is expected to generate a revenue of USD 4263.7 billion by 2025, according to a new report by Grand View Research, Inc. This revenue hike is dependent on multiple factors like globalization, industrialization, migration to better options for an elevated lifestyle, commercialization of spaces and economic development of developing countries.

Real estate can be majorly categorized as residential, commercial and industrial usage properties. According to United Nations, approximately 50% of the population lives in urban areas and this figure is set to reach up to 65% in the forecast period owing to the migration into cities that turn into megacities. Migration is one the key factors. People migrate to bigger cities that has better infrastructure, amenities and an elevated lifestyle. Bigger cities provide more opportunities for an academic or corporate career. Special Economic Zones are built to cater to the rising employment opportunities. Such zones have a host of commercial offices that function in the ecosphere. Government also provide few tax benefits and lower rentals on such spaces to attract more attention from investors.

With industrial revolution came the increased demand for more open lands to build vast industries. Such spaces are far away from residential and commercial areas to avoid decontamination of air, soil and reduce disturbance. Government reforms in favor of industrialization has lowered the land rates and also the mortgage rates. This enables more interest from businessmen and investors.

Higher population and raised standards of living invite bigger opportunities for key players of retail and healthcare industries to invest in real estate when the time is ripe. Market demand for retail and medical needs is a forever upward graph which makes investment in these sectors a profitable deal. Real Estate investment is globally a high returns low risk investment. Here’s why:

  • Increased Cash Flow

A good real estate investment can provide with 6% or more cash flow, according to researchers. Cash Flow is the income derived from the real estate investment after deducting all operating expenses, mortgage payments and any other deductibles.

  • Appreciating Asset

Real estate investment is an appreciating asset. The value of your property is only going to increase with time and give you higher returns when you sell it. Real estate ages well like fine wine.

  • Tax Advantage

Real Estate investors can benefit from reduced tax on their real estate mortgage. Various government schemes and tax benefits make real estate a brilliant investment.

  • Passive Income

You can earn a steady passive income by mortgaging one of your properties to a renter. This steady cash flow coupled with the appreciative nature of your asset makes for one strong investment.

  • Leverage

Leverage is the increase in returns given by the investment by using various financial instruments. Real estate properties can act as an excellent leverage to get loans or additional financial aids as they serve as a tangible collateral.

  • Equity Build-up

When you buy a real estate property, as you pay the mortgage, you are investing in your asset which builds your equity. As your equity is increased, your net worth is increased. Increase in equity provides more cashflow which in turn helps in buying more properties.

Real Estate is one of the simplest yet stable methods of wealth building. A well curated real estate portfolio is a guarantee for better returns, higher equity and an enjoyable retirement plan with no strings attached.

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