Friday, 26 August 2011
Investing in real estate in India
Property Investments in India have normally been a gold mine for most investors. The growth and development of cities across the country have added fuel to the rise in prices across the country. According to a survey conducted by ASSOCHAM, 65% of working individuals prefer real estate as a mode of long term investment.
Property prices in India have increased by 16.5% in the last year according to a study by Makaan.com. The question now for investors is how best to benefit from investments in realty; whether to look at investments directly in property or route the investments to real estate companies that are listed on the stock markets.
Investment in Real Estate Stocks:
The realty index has recently underperformed the Sensex by as much as 47%. This raises a question on why companies are not able to replicate the returns that investors make while investing on property. Real Estate companies have been facing volume pressures and are burdened with huge debts which lead to outflow of cash towards interest rate commitments.
Increasing interest rates are a double whammy for real estate stocks as its add pressure on bottom lines for companies plus reduces demand as customers postpone real estate purchases. Increasing costs of raw materials add pressure on the margins of real estate companies. Investors can also look at the land base, debt levels and the segmental diversification of the company.
Property prices in India have increased by 16.5% in the last year according to a study by Makaan.com. The question now for investors is how best to benefit from investments in realty; whether to look at investments directly in property or route the investments to real estate companies that are listed on the stock markets.
Investment in Real Estate Stocks:
The realty index has recently underperformed the Sensex by as much as 47%. This raises a question on why companies are not able to replicate the returns that investors make while investing on property. Real Estate companies have been facing volume pressures and are burdened with huge debts which lead to outflow of cash towards interest rate commitments.
Increasing interest rates are a double whammy for real estate stocks as its add pressure on bottom lines for companies plus reduces demand as customers postpone real estate purchases. Increasing costs of raw materials add pressure on the margins of real estate companies. Investors can also look at the land base, debt levels and the segmental diversification of the company.
Total Private Equity Investment in Property:
