Robust home sales spark investor interest again

Investors are back to buying residential properties, leading to better price appreciation, and given the momentum in the sector there is scope for good returns going ahead, said industry leaders.

The residential real estate market had become an end-user driven market in the past few years, with investors staying away because of the lack of movement in prices of properties. That is now changing, they said.

"A big incentive for investors is the rise of housing prices, after having remained flat for the last 3-4 years, pointing to good prospects for capital appreciation. The pandemic fuelled an increased interest in home ownership. And factors like low interest rates and real estate retaining its value in the backdrop of stock market volatility have all amalgamated to bode well for the residential sector," said K Raheja Corp Homes chief executive Ramesh Ranganathan.


The depreciating rupee has led to a considerable uptick in interest from wealthy Indians and NRIs from West Asia.

"Investors have leveraged the pre-launch discounts offered by developers to encash on a buoyant market. In some key micro markets like (Gurgaon’s) Golf Course Road Extension, investors have liquidated assets with an upside of 25-30% in just one year, especially in case of investments done in plots and pre-launches," said Shalin Raina, managing director, residential services at real estate services company Cushman & Wakefield. “Since the equity markets have been volatile, that has also contributed to making real estate a favourable investment option for investors.”

According to market participants, the growing trust of the investor community in real estate as an asset class is one of the key reasons that led the market to rebound strongly.

Prior to Covid-19, investors had been steering clear of residential real estate but still focused on commercial properties, which yielded better returns.

"Everything changed after the pandemic, when there was a massive resurgence of housing demand which continued to the present day and will sustain in the future as well," said Santhosh Kumar, vice chairman, the Anarock Group.

Leading developers have started to increase prices because of rising input costs and higher demand.

"While the past few years and the pandemic era did witness a bit of a slowdown in this sector, the market is now back on track and there has been growth in demand with more and more investors now open to exploring this option," said Vishal Raheja, MD, InvstoXpert, a real estate brokerage firm.

According to real estate service firm CBRE, residential real estate is poised for a strong year in 2022, with both supply and new launches expected to post a robust performance.

Asset prices are likely to witness an uptick on account of strong momentum in sales as well as developers’ decision to pass on the rising input and labour costs to buyers.