Residential properties are again on the radar of investors who seek to buy properties for long-term capital appreciation than for occupation and this segment is expected to see a rise in the near term with tangible signs of economic recovery.
However, present investments are not speculative in nature as they used to be in the pre-recession period.
“There is a fair degree of investor interest in residential projects as of now and it is expected to rise in the near future,” Anil Kumar, chief financial officer, Mantri Developers said.
Real estate prices, which underwent a sharp correction during the recession, was yet to see the peak levels and hence, give ample scope for capital appreciation in future, he added.
High net worth individuals (HNIs), non-resident Indians (NRIs), professionals and domestic investors with large disposable incomes are the usual investors in residential properties in India.
“NRIs from West Asia, Europe and the US are showing interest in the segment as there is a vast scope for capital appreciation both in this asset class and rental value in future,” he added.
He, however, said that rising investment interest was not speculative in nature with expectations of short-term capital gains.
Referring to the issue, Ramani Sastri, CMD of Sterling Developers said, “Presently, most transactions are being done for self occupation and the investors are beginning to trickle in.”
He also said, historically, real estate was a safe bet for long-term capital appreciation with sound returns to investors.
Further, most of these investments are likely to be in the metros with assured return on investment than in tier-II and tier-III cities.
“Investors are concentrating on residential projects close to workplace catchments, industrial hubs and locations with high aspirational value. Tier-I and tier-II cities like Mumbai, Delhi, Chennai, Bangalore, Kolkata and Pune are witnessing higher demand from serious investors,” Karun Varma, managing director- Bangalore, Jones Lang LaSalle Meghraj said.
There is no investment interest being shown by speculators who used to focus on futuristic locations in tier-II and tier-III cities, he added.
“Demand by investors in both the primary and secondary sales segment is based on verifiable investment value,” Varma said.
However, analysts have a different view.
“Though investment interest has risen in comparison to recession, the uptake is not encouraging due to a recent price hike by developers,” Jay Mavani, partner, KPMG said.
With a rise in interest rates and price hike by developers, investors are less inclined to put their money as they don’t expect significant capital appreciation in the near term, he added.
He, also, said that there was no significant change in the profile of investors with most of them looking for short-term gains.
