All you need to know before making investment in real estate

09 December, 2022

Earlier, people planning to invest their money preferred the stock market and fixed deposits and purchasing property was mostly limited to buying a house for oneself. But this behaviour witnessed a change over the years and especially more so during the last two decades, when Indians started investing in property as it promised good returns. Last year, with the pandemic affecting our lives, it became clear that in view of the stock market crisis and businesses closing down, owing to loss of demand, investment in real estate is a good bet as real estate remains the most reliable form of investment. However, before you decide on the important factors affecting real estate investment, we have made a list of type of real estate to choose from, as most new investors in real estate don't know the many different types of real estate investment options. 

Types of Real Estate 

Before investing in real estate, it’s good to know the various categories of investment options so that you make your pick wisely, depending upon the availability of funds and your needs, so that you know what awaits you in the future. 

1. Residential real estate 

Traditionally, residential real estate includes buildings used by human beings for habitation purposes and are usually bought for self-use. In certain cases, people also invest in residential real estate for the purpose of renting it to tenants as a source of income. In some cases, certain people buy this kind of property to benefit from the price appreciation of the property in future. The various types of properties in the residential segment that you can choose from includes plots, independent houses and apartments. All the forms of residential real estate have their own unique pros and cons and one should make a decision on the basis of what kind of property they are looking for. 

2. Commercial real estate 

Commercial real estate, an interesting and profitable asset class, is usually in the form of warehouses and office spaces. An important feature of such properties is their rent yielding capacity and also possibilities of price appreciation, which makes it a lucrative investment option. In India, before the pandemic struck, there was a huge uptick in the demand for commercial properties. Typically, commercial real estate includes various categories like retailers, office spaces, hotels, resorts, malls and restaurants.

Things to know before investing in real estate 

Once you know about the different types of real estate on offer and the type of property that you want to invest in, you can now go further and think about the other things to consider before making an investment. Since investment in real estate is a big commitment, where you will need to invest more money as compared to the returns, it’s important that you have your budget and finances in order. Another important factor to know is the location of your preferred investment option. Whether you plan to purchase a house, apartment or commercial office space, choosing the right location is of prime importance as this will determine if your property appreciates in the future. Another important thing to know before making investment in real estate is knowing the market conditions. For example, in the post-pandemic world that we are living in right now, the real estate asset class that is more in demand these days and will yield good returns is in the form of data centres, warehousing, and even fractional ownership of A-grade office real estate are some exciting models with good prospects. 


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