Why are investors in Mumbai choosing real estate over other assets?
When it comes to investing, there are three critical factors to consider: the initial investment amount, expected returns, and the time frame for realizing those returns. In the bustling metropolis of Mumbai, real estate has emerged as a prime choice for investors. This preference is not arbitrary but rooted in several compelling reasons, including Mumbai's status as a major financial hub, ongoing infrastructure development, flexible Floor Space Index (FSI) regulations, a thriving economy, and government initiatives to make the real estate market more investor-friendly.
Mumbai, known as the financial capital of India, is a magnet for investors. With its dense population and rapid expansion, the city is a hub for major corporations. Headquarters and offices of numerous business giants call Mumbai home, making it a hotspot for commercial real estate investment. As a result, Mumbai's real estate sector offers lucrative opportunities for potential investors.
Mumbai has seen significant infrastructure development, including metro expansions, road enhancements, and the upcoming Navi Mumbai International Airport. These projects improve connectivity within the city and boost property values in surrounding areas. Investing in locations near these upcoming projects can be a smart move, ensuring potential appreciation and capital gains in the future.
Mumbai's unique approach to Floor Space Index (FSI) sets it apart from other cities. FSI regulations allow for the construction of taller buildings, which significantly maximizes land use. This means more property can be developed on a particular piece of land, leading to increased profits by selling flats in these high-rise towers. The city's skyline, dotted with towering structures, is a testament to this advantageous FSI policy.
India's booming economy plays a pivotal role in real estate investment. A growing economy leads to an increase in per capita income, making it easier for people to buy flats and opt for luxury residences. As a result, real estate in Mumbai becomes an attractive choice for investors looking to capitalize on the upward trend in the economy.
The Indian government has implemented several initiatives to bolster the real estate sector, such as the Pradhan Mantri Awas Yojana (PMAY) and the Real Estate (Regulation and Development) Act (RERA). These measures aim to enhance transparency and make the real estate market more investor-friendly. This increased regulation provides a sense of security for investors, making real estate a more attractive option.
Real Estate Investment Trusts, or REITs, offer investors an alternative way to invest in real estate. REITs are corporations that hold and manage income-producing real estate properties. They lease properties and distribute rental income among shareholders as dividends. This investment avenue allows investors to own a share of high-value real estate, earn dividend income, and potentially appreciate their capital over time. Both large and small investors can participate in REITs, allowing for diversification and increased accessibility to real estate investments.
It is said “Investments are subjected to market risks” but for developing countries like India, where millions are first-time homebuyers, there is still a significant journey ahead for the real estate market. For India to become a developed nation, a majority of the population needs to become homeowners. This demonstrates significant potential for high returns in the real estate market.