Secrets To Getting Highest Yields In The Indian Real Estate Market
Post on 02,May 2019   6:45 PM
By - PolyEyes Staff
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The sheer potential of the Indian rental real estate market is what makes it so alluring what with the volume of rental units expected to grow to 1.8 crore units valued at Rs 2.85 lakh crore according to a report by Indian Economic Times. Nevertheless, while there's a lot of potential and tonnes of opportunities to make money, many developers in the region have ended up on the losing side courtesy of bad investments and poor yields. It is for this reason that finding a financial consultant and doing due diligence on real estate trends before investing in developing is extremely important. If you want to maximize your rental yields and get high returns on your investments, then you must learn where, when and how you need to make your real estate investments. Smart choices and strategic planning are key to business success. Below we look at key factors that can make or break your developments.

The Location of Your Developments

Location is to real estate what oxygen is to humans. The flourishing of one depends on the other. With that in mind, if you want maximum rental yields, then forget about porch neighborhoods and focus on developing in affordable localities. While it may seem counterintuitive as you want to go to where the money is, research by Magicbricks indicates that micro markets located in large cities or across metros with reasonable property prices guarantees higher returns than the average 3% yield.

The best locales to develop in include Kolkata (Garia and Barasat), Bengaluru (BTM layout, along Hosur Road and in Bellandur), Ahmedabad (Vejalpur, Bhopal and along Sardar Patel Ring Road), Hyderabad (Toli Chowki and Nallagandla) and Ghaziabad ( Vasundhara sector 1 and Gyan Khand). These areas according to statistics from Magicbricks produce yields of between 3.8% to 4.5%. Developing in any of the cities on the government's smart city push list will also lead to high returns on your investments. The worst places to invest real estate in include Navi Mumbai, Gurgaon, Thane, New Delhi, and Mumbai. Should you develop in these areas, expect rental yields to go as low as 1.6%.

The Pricing of Your Developments

The last 5 years have seen a dwindling demand for real estate developments with the exception of affordable homes according to Livemint. This is where you need to put your money. Compared to luxury and mid-level homes, affordable homes have proven to bring in higher yields. Houses priced at Rs 6000 per square foot rake in yields of between 2.4% and 3% while those below Rs 6000 per square foot bring above 3% on yields. In an interview with Livemint, developer Pradeep, the chairman, and co-founder of Signature Global said the affordable homes segment in 2018 witnessed a 22% growth in sales. The numbers are bound to only go higher as there is great demand and limited supply.

Aside from the ready market, another good reason to invest in this segment are the government incentives currently on offer. In a bid to achieve its mission of providing housing of all by 2022, the Indian government launched several initiatives one of the biggest being Pradhan Mantri Awas Yojana (Urban). Should you get contracted under this initiative you can expect tax exemptions on profits, lenient regulations and favorable construction policies among other incentives. There has never been a greater time to invest in the affordable homes segment in India. Andrew Carnegie once said that 90% of millionaires became so by owning real estate. The time is ripe so do what you must to find the money to invest in the affordable homes real estate market, be it through liquidating assets, taking out loans, crowdfunding or looking into equity release for older property owners.

Another factor that is key to maximizing rental yields is the type of development. Millennials who make up 30% of the Indian population prefer apartments that are furnished and favor co-living situations. By furnishing your rental apartments, you increase your yields by .3%. Availing basic or popular amenities like clean water, electricity, wifi, cable TV, smart home devices, entertainment or theater rooms, and gyms are other tricks you can have up your sleeve to maximize your rental yields.


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