A Beginner’s Guide to Real Estate Investment in India

By Pawan Kumar Agarwal

New Delhi, May 7, 2025: India’s real estate sector has consistently been a preferred investment option for experienced and new investors. Its potential to generate significant profits has made it a popular choice among investors, who see it as a secure, dependable and profitable investment opportunity.

Although the idea of investing in real estate may appear straightforward, it necessitates thorough research, meticulous planning and a deep comprehension of market dynamics.

A Lucrative Pool of Opportunities

The real estate industry serves as a guiding light for new investors, mirrored by the country’s dynamic economic expansion and urbanisation.

According to the Indian Brand Equity Foundation, the industry is expected to grow to a staggering $ 5.8 trillion by 2047, significantly boosting the country’s GDP from the current 7.3 per cent to a remarkable 15.5 per cent. The significant growth in the sector demonstrates its potential and the numerous opportunities it offers for discerning investors.

The residential sector remains the foundation of the real estate market. In 2024, the market experienced the launch of 372,936 residential units, marking a 6.33 per cent rise from the previous year and achieving the highest annual volume in the past 11 years.

The luxury housing segment has also experienced significant expansion with affluent Indians making substantial investment in high-end properties. For example, DLF’s ‘The Dahlias’ project in Gurugram achieved sales of $1.4 billion within just nine weeks, highlighting the strong demand in this particular segment.

The commercial real estate sector is not lagging. Statistics state that alone in the first nine months of 2024, gross leasing of office spaces reached a record 53.4 million sq ft, propelled by key sectors such as IT, BFSI, Engineering and Manufacturing.

The increasing adoption of flexible office spaces and the ‘Core + Flex’ model became more prevalent, reflecting the changing nature of work. As more employees return to their workplaces, the need for office spaces has increased significantly, resulting in a 17 per cent decrease in vacancy rates—the lowest recorded in 14 quarters.

For individuals venturing into real estate for the first time, the Indian market presents exciting opportunities, particularly in urban hubs such as Bangalore, Delhi (National Capital Region), Coimbatore and Hyderabad, renowned for their significant growth prospects.

Key Factors to Consider

Location: The location of the property is crucial as its value will increase over time, particularly if it is in an area with excellent infrastructure.

Properties in developing areas tend to appreciate more over time, which attracts a lot more renters. These include, but are not limited to, neighbourhoods with good schools and healthcare facilities as well as reliable public transportation. Being located near a major business centre adds value too.

Market Research and Due Diligence: Real estate is an area which requires consideration of many factors to be a worthwhile investment. One of the primary factors is conducting market research, including analysis of the supply and demand, the history and appreciation of prices over time, legal implications and other related issues.

Working with qualified real estate practitioners like property managers, agents or consultants makes the task easier. Their expertise will help you make better decisions along the way.

Budgeting and Financing: Finance and budgeting are daunting tasks that must only be carried out after spending ample time considering all the factors mentioned beforehand.

At this stage, clearly define the investment objective and allocate the budget. In India, home loans for property purchase are pretty standard; they are offered by most banks with an accessible interest rate of about 7-9 per cent. Make sure that, besides paying the loan, you will still be able to manage other monthly financial obligations.

Regulatory Landscape: Over the past few years, the legislation around real estate has changed considerably. The implementation of the Real Estate (Regulation and Development Act) 2016, or RERA, has enhanced buyer and investor safety and openness. The RERA regulation is critical for ensuring smooth investment operations, and understanding it as well as other related policies, is vital for compliance.

All in all, although real estate is generally considered a secure investment, it’s not without risks. Property damage, price fluctuations and legal disputes are a few of the risks investors might encounter.

To reduce the risk, it is crucial to have an effective exit strategy, diversify the investment portfolio and keep an emergency fund. Real estate investment in India presents exciting opportunities, but it requires careful planning, meticulous study and a well-informed strategy.

The expansion of the real estate market brings forth a fantastic investment option for investors who are willing to invest and grow with time.

The author is Managing Director of NK Realtors