Real Estate Investment in India

Real estate market in India has made a very strong position in last few years. It has huge potential in many sectors like residential, industrial, hospitality, commercial, healthcare etc. This growth has been achieved due to an increase in purchasing power of the people. Banks and other financial institutes are providing loans on easy terms which have captured the interested of the general public to get the maximum returns on their investments.

The residential sector in Indian real estate market contributes up to about 5-6% of Indian gross domestic product (GDP) and estate market is expected to reach up to US$ 180 billion by 2020. Mumbai is known as the best city in India for the investment in commercial real estate followed by Bangalore and New Delhi.


With the advent of many new IT companies and retail and consultancy services, people are more inclined in starting their own businesses of providing these services. This has led to an increase in demand for the office space. More and more people from smaller cities are migrating to bigger cities, which has resulted in higher demand for residential properties.

The government of India offers certain tax benefits for the people who are interesting in making investments in real estate business.

  • People can avail tax exemptions on reinvestment of sale proceeds of property in certain cases.
  • Tax benefit on interest on housing loan in certain cases can be availed by people.

With having multiple benefits and perks, investment in real estate also come with certain risks elements that one must keep in mind before making such investment.


The location of the building where investment is being made holds utmost importance to gain maximum returns on the investment. A property investment is a long-term one, so it should be made after proper thought process and going through a whole lot of information related to that particular area. The physical attribute of the building also matters a lot.


Investment in property is less liquid than many other forms of investment. It may be a tedious and tiresome process of selling a real estate property if you need urgent money. If the market is poor, things can be more difficult for you.

Applicable tax:

Income tax is paid on the rental and capital gains the owner is getting from the investment. In addition, the investors are also required to pay property tax and stamp duty. There are certain cases and areas where the government can give you tax rebates.

Risks involved with tenants:

If the investor has rented their property, there are certain risks involved with tenants. They should be selected carefully after going through all their credentials and their background should be double checked. If the tenant becomes a defaulter, it will be a loss of income for the investor.

All these risks can be tackled with proper planning. Despite these risk involving factors, investment in real estate is still considered safe and the right investment can give you the best returns.

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