Is housing an investible asset at all? To find an answer to this question, Magicbricks, in association with KPMG in India, has launched a report titled – ‘Residential Real Estate: An Investible Asset’. The report aims to decode the asset class that spells hope, social status and a definite return on investment.
The one-of-its kind report captures and analyses the Indian housing market and enlightens home buyers on major factors such as demand-supply dynamics, regulatory and economic environment, physical and social infrastructure, which can impact their residential property buying decisions, and also covers key underlying themes.
‘Residential Real Estate: An Investible Asset’ reveals that India was ranked among the best performing markets globally thanks to the fact that real estate property prices have more than doubled over the last decade. Interesting to note is the affordability rate to own properties has come down by 50 per cent, as income growth has lagged property price growth. That being said, India’s property market is relatively affordable as compared to its global counterparts.
The report was unveiled by Amitabh Kant, CEO, Niti Aayog, during a glittering event.
The report states that though the residential real estate market remained subdued towards the end of 2016 due to demonetisation, it may take time to pick up as RERA and GST are likely to disrupt the real estate market in the short term. However, the market is expected to pick up in the next couple of quarters.
The real estate market has generated strong return on investments to home buyers in the long-term, and is expected to continue to perform well due to the positive steps like reduction in interest rates, interest subsidy to home buyers, increased mortgage penetration and ease of FDI norms in the real estate and construction sector.
Commenting on the report, Sudhir Pai, CEO, Magicbricks, said, “The urban population of India is anticipated to grow by nearly 36 per cent to over 580 million by 2030. This along with GDP growth, job creation and mortgage growth is expected to lead to a substantial increase in demand for housing in India. This report is our latest endeavor to decode the asset class and educate homebuyers about the major factors such as demographics, economic development, regulatory environment, and physical and social infrastructure that could impact their investments.”
Commenting on the real estate industry’s performance and way forward, Neeraj Bansal, Partner and Head, ASEAN Corridor, and Building, Construction and Real Estate Sector, KPMG in India, said, “India holds a strong potential for residential property market growth, which is likely to witness considerable price appreciation over the next decade, with property market fundamental drivers, such as GDP, rapid urbanisation, shrinking household size, higher share of working age population, and mortgage growth expected to grow at a higher pace in India. Globally, every sixth person getting urbanised is an Indian. The government has released several programmes on mission mode in urban infrastructure, housing and mortgage finance to tap the opportunity offered by the urban blessing. It is envisaged that by 2030, the real estate and construction sector in India is expected to become the third-largest globally, doubling its share to over 15 per cent in the Indian GDP.”
Mritunjay Kapur, Partner and National Head, Strategy and Markets, KPMG in India said, “For any country its housing sector can be an engine of growth. For a nation like India, which has been witnessing rapid urbanisation over the past decade with an addition of over 10 million people to its urban population annually, the need for housing has become even more important. The Indian government has undertaken several policy initiatives to support the Indian real estate and housing sector.”
On Magicbrick’s association with KPMG in India for the report, E Jayashree Kurup, Head-Content and Advisory, Magicbricks, said: “Residential real estate is a unique asset that appreciates in the long term even as it can be put to rigorous use. Magicbricks and KPMG have taken a deep dive into the various aspects of this sector to benchmark it against global markets and assess its returns in the long term. It will be of use to retail buyers, industry and the finance sector to be able to assess the short, medium and long-term returns on investment and the factors that drive it.”
Key insights from the report: