Experts say that real estate can diversify an investor’s portfolio beyond conventional assets like stocks and bonds.
Real estate investment opportunities post-budget 2024
Seasoned investors and aspiring homeowners are pleased to see Union Budget 2024 placing significant focus on improving India’s infrastructure and housing. This suggests that there could be more opportunities for everyone to benefit from, especially for the younger folks, who see real estate investment as a smart move while planning their finances for the future.
As the government keeps focusing more on these areas, investing in real estate looks even more appealing. This creates a sense of excitement and optimism for the future. Let’s take a closer look at why putting your money into real estate could be a smart move in 2024.
A Steady Income from Rentals
With time, we’ve learned that investing in real estate, particularly in residential properties, serves as a dependable source of income through rental earnings. The ownership of property allows individuals to lease out spaces to tenants, ensuring a steady stream of income flows in every month. Unlike stocks and mutual funds, real estate is a tangible asset that can yield consistent returns over time. Whether it’s owning a single apartment or a rental property, the revenue generated from rentals can significantly contribute to your finances.
Tax Advantages for Real Estate Investors
The Union Budget’s focus on improving homes and infrastructure also comes with special tax benefits. Here’s a glimpse:
Interest Deduction: Homebuyers can leverage deductions on home loan interest payments under Section 24(b), thereby, reducing the overall tax burden and making homeownership more financially viable.
Capital Gains Tax Exemption: Individuals selling residential properties and reinvesting the proceeds in another property within specified timeframes can avail of capital gains tax exemptions under Section 54 and Section 54F.
Affordable Housing Deductions: The budget’s focus on affordable housing opens avenues for additional deductions under Section 80EEA, particularly beneficial for first-time homebuyers.
Diversification of Portfolio
Real estate can diversify an investor’s portfolio beyond conventional assets like stocks and bonds. Property values tend to appreciate over the long term, serving as a hedge against inflation. Moreover, real estate operates independently of stock market fluctuations, which will help in reducing the risk of your overall investments. By allocating a portion of your investments to real estate, you’re making a strong financial plan with more stability.
Creating a Long-term Plan
As you build a real estate portfolio, you’re creating assets to financially support your future. In this journey, safeguarding your financial interests becomes crucial. That’s where stands out as a prudent choice to help you take wise risks. Here are some of its key features:
Boost your fund value with 4 kinds of loyalty additions (return of 2x to 3x mortality charge, return of 2x premium allocation charge, return of fund management charge and return of 2x of investment guarantee charge).
Get a minimum assured benefit in the form of capital guarantee despite market fluctuations.
Flexibility to choose the premium payment option- regular or limited (5 to 12 years).
Reduce your Death Benefit Cover after a chosen period under Decreasing Cover and Decreasing Cover with Capital Guarantee plan options.
Whether the aim is to support children’s education, prepare for retirement or leave a legacy, real estate investments are pivotal. And when these opportunities come your way, remember- wise choices made now will help build a successful future.
The release of foreign direct investment figures, showing that inbound investment into China is now the lowest in thirty years (at USD 33bn) calls into question the health of the Chinese economy, and what Western investors should do regarding its financial markets.
Granted that it is the second largest economy, we know relatively little about what is really happening economically and politically in China. In the past decade, Western investors have put less weight on headline economic measures such as GDP in favour of micro indicators like electricity usage, owing to fears that official indicators do not ‘tell the real picture’. Politically, there is a sense that China is much less an ‘open book’ and it is therefore harder to read the intentions of its government. In the absence of such clarity, investors are staying away from China
Reflecting that, the performance of Chinese assets has been lethargic, and valuations (of equities are now very low). Compare for example the performance of Alibaba to that of AmazonAMZN. As such one can begin to wonder if the concerns that investors have over China are now price in.
Specifically, those concerns relate to three broad areas – US/China relations and the risk of a conflict around Taiwan, the structural risks to China’s economy (European readers will recognise the risks to the Chinese property market), and the apparent lack of urgency in economic policy making.
Some of these risks are ebbing, for the time being. The Taiwanese presidential election has passed without incident and diplomatic communications between the US and China have improved.
Economically, risks remain. China wants and needs to grow at a rate of close to 4% for the next decade to stay on track with its ‘grand plan’. It has not had a major recession in recent decades but as a result is likely accumulating the ingredients of a structural downturn – notably over capacity, inefficient investment and large pockets of debt. External risks remain – a new trade war with the US (should Trump win another term) and a robust European response to the dumping of electric vehicles, are just two scenarios.
My sense is that when large markets are considered ‘uninvestable’, as was the case with the euro-zone in the mid 2010’s, it is time to start to warm up the investment case. China is cheap but we do not yet have a catalyst, either an overwhelming stimulus or a form of mini-crisis (trade war or debt blow out).
KUALA LUMPUR: Global real estate consulting firm JLL has maintained an optimistic outlook on market activity in Malaysia, aligning with positive macroeconomic expectations.
In a statement, JLL Malaysia head of research and consultancy Yulia Nikulicheva said that in the first quarter (1Q) of 2024, it anticipates potential notable transactions in Malaysia.
“We are observing the keen interest of both international and domestic investors who are carefully evaluating opportunities across all sectors,” she said.
JLL Asia Pacific capital markets chief executive officer Stuart Crow said that while the cost of debt remained elevated, investors across Asia Pacific are still erring on the side of caution.
“The prospect of interest rate cuts in 2024 may potentially reverse current trends, but we can expect greater sector diversification among investors, particularly towards sectors such as logistics and industrial and living, which have seen high investor conviction across the region,” he said.
According to JLL, commercial real estate investment in Asia Pacific rose three per cent year-on-year (y-o-y) to US$31.6 billion (1US$ = RM4.78) in the 4Q 2023 after seven consecutive quarters of decreasing volumes.
JLL said that in 4Q 2023, an uptick in volumes provided some upside after a challenging year that saw overall investment across the region decline by 17 per cent y-o-y to US$106.8 billion.
It said China stood at the forefront of Asia Pacific’s investment rebound for the second consecutive quarter, recording a 50 per cent y-o-y increase in volume to US$11.1 billion.
“Sectors such as logistics (decreased five per cent to US$6.5 billion) and living (rose 24 per cent to US$1.5 billion) performed better than other sectors, especially in China.
“Investments in office, down 13 per cent y-o-y to US$13.7 billion, continued to contract amid uncertainties on interest rate movements, the extent of re-pricing and occupancy,” it added. – Bernama
Disclaimer: We adhere to strict standards of editorial integrity to help you make decisions with confidence. All links marked with an asterisk ( * ) are paid links.
Mixing business with friendship is almost always a tricky proposition. One college student had to learn that the hard way when she tried her hand at being a landlord.
Reddit user, EqualBudget_3179, recently posted a cautionary tale on the site after her uncle let her live rent-free in one of his investment properties and collect rent from three other tenants to help pay for her expenses. EqualBudget_3179 offered their friends these extra bedrooms for $700 per month each – a good $200 to $800 cheaper than other houses near her college. They all immediately said yes. But when one of them asked about the total cost of rent, the friends freaked out when they found out the arrangement with her uncle.
“That blew up in my face because now every [sic] one of my friends [is] calling me greedy for charging them rent then pocketing the money,” EqualBudget_3179 writes in her post. The Redditor goes on to write that she ultimately decided to ask them to move out.
The trials and tribulations of being a landlord might be worth the long-term financial gains for some, but if you’d rather skip out, here are some different investing options you can try.
Grocery-anchored real estate investing
For starters, private equity firm First National Realty Partners* gives you access to the lucrative potential of necessity-based commercial real estate. With FNRP’s platform, accredited investors can invest in institutional-quality, grocery-anchored real estate investments* without the leg work of finding deals on their own.
Since the investments are necessity-based, they tend to perform well during times of economic volatility. And of course, it won’t be your job to deal with tenant complaints and maintenance issues.
If you’re an accredited investor, but commercial real estate isn’t your thing, you can also check out DLP Capital* — a private financial services and real estate investment firm — that makes investing in REITs easily accessible* so you can benefit from high-return investments, solid dividends and the potential for moderate, long-term capital appreciation.
DLP Capital’s housing fund was created with the goal of improving communities that produce a lot of rental income through their acquisition and management of these rental homes. So, not only are you investing in a worthy asset, you’re investing in its community.
For those of you who are non-accredited investors, don’t worry, there are accessible options for you to get your hands in the real estate game too.
Read more: Here’s how much the average 60-year-old American holds in retirement savings — how does your nest egg compare?
Invest in rental and vacation properties
With Arrived’s* online platform, you can invest in shares of rental homes and vacation rentals.
Start by browsing a curated selection of homes, vetted for their appreciation and income potential. Once you find a property you like, you can choose the number of shares you want to buy. With Arrived, you can start investing in real estate with just $100*.
If you’ve got a particular city in mind — perhaps one you dreamed of moving to one day before increased cost of living made these cities unaffordable to many people — you’re in luck. With Cityfunds by Nada*, you can now own a piece of a desirable U.S. city without actually buying property.
Buy a piece of your favorite city
Cityfunds by Nada is an online investment platform that makes diversified portfolios of owner-occupied properties in top U.S. cities accessible without you having to break the bank or play landlord.
For as little as $500*, you gain immediate exposure to multiple properties through Nada’s Cityfunds in cities like Austin, Dallas, Miami, Tampa, Denver, Phoenix and Nashville.
Join Nada’s 10,000+ users today* and get your hands on owning a part of the $20 trillion home equity market for a single city.
If you think taking on the mantle of landlord is too much, you have plenty of accessible options to build the real estate portfolio of your dreams.
What to read next
The biggest crash in history’: Robert Kiyosaki warns that millions of 401(k)s and IRAs will be ‘toast’ — here’s what he likes for protection
We’re looking at a downsized America’: Kevin O’Leary warns any new house, car and lifestyle you enjoy will be significantly ‘smaller’ — here’s what he means and how you can prepare
Bill Burr once complained to Joe Rogan that his bank took $28 every month ‘for no reason’ — now the government is taking action on these frustrating fees. Here’s how you can avoid them
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
WiseX, a neo-real estate investments platform that facilitates fractional ownership, has launched a rent-yielding investment opportunity in Pune and plans to raise more than ₹80 crore from it.
Sky One Corporate Park houses tenants such as Vertiv, Kantar, Piaggio Vehicles, Sincro and the investment deal covers the 58,661 sq. ft. leasable area on the 9th floor which is leased to Vertiv.
With a minimum investment starting at ₹25 lakh, this institutional asset will offer an entry yield of 9.6 per cent and an average rental yield of 9.5 per cent per annum.
The company is expecting to achieve a target IRR of 15.1% over a 5-year investment period.
“We have been working to secure this asset for more than two years and are very excited to finally be able to offer it to our investors. WiseX (Previously MYRE Capital) pioneered fractional ownership in the commercial real estate sector and has emerged as one of the largest neo-realty investment platform. We believe the recent SEBI consultation paper and proposal on regularizing such investments via MSM REITs will further help in democratizing real estate investment thus opening doors to more investors,” said Aryaman Vir, CEO of WiseX.
In the past WiseX has offered numerous opportunities for investment under the fractional ownership model across Bengaluru, Pune and Mumbai which were fully subscribed in record time, the company said in a statement.
Germany’s office property market has seen a record drop in prices, coupled with disappointing returns for investors.
German office properties have seen a significant slump in price despite an increase in returns, according to new figures.
Office property prices fell by 5.2% in the last quarter of 2023 – compared to the previous quarter – and 13.3% year-on-year, German banking association vdp said in a press release on Monday.
The numbers mean that Germany’s office building market has seen its sharpest drop since 2004.
The picture is less severe when looking at retail property prices, vdp said, which dropped by 9% year-on-year and 3.9% quarter-on-quarter. However, the banking association noted that retail properties have been suffering from a fall in prices for much longer than office properties.
According to vdp, retail rents under new contracts increased by 2.5% yearly – a record since 2019. Despite limited growth in retail rents since 2003, returns on retail properties rose by 12.7% in the last quarter of 2023, breaking previous records.
Returns on office properties also rose 17.5% in the final quarter of 2023 compared to the same period in 2022, vdp said.
Nevertheless, they have so far failed to meet investors’ expectations, according to Jens Tolckmitt, vdp’s chief executive.
“On top of this, demand for offices remains subdued due to the uncertain economic growth in Germany and the still unclear impact of the working from home trend on office space needed,” he added. “So prices continue to depress. Retail properties, on the other hand, are much further along in the cycle, as evidenced by the first increase in rent under new contracts for more than four years.”
When asked about his outlook for the property market in the current year, Tolckmitt expressed caution.
“The property market remains in a downturn as we start 2024, and prices continue to drop. It will be some time before property buyers and sellers reach a new price balance, and only then will we see a noticeable recovery in the market,” he said.
by Calculated Risk on 2/04/2024 09:04:00 AM
On Friday, the BEA released their estimate of vehicle sales for January.
This graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the January 2024 seasonally adjusted annual sales rate (SAAR).
Heavy truck sales really collapsed during the great recession, falling to a low of 180 thousand SAAR in May 2009. Then heavy truck sales increased to a new record high of 570 thousand SAAR in April 2019.
Note: “Heavy trucks – trucks more than 14,000 pounds gross vehicle weight.”
Heavy truck sales were at 485 thousand SAAR in January, up from 458 thousand in December, and down 3.1% from 501 thousand SAAR in January 2023.
Usually, heavy truck sales decline sharply prior to a recession. Heavy truck sales are solid.
The second graph shows light vehicle sales since the BEA started keeping data in 1967. Vehicle sales were at 15.00 million SAAR in January, down 6.9% from 16.12 million in December, and down 0.7% from 15.11 million in January 2023.Vehicle sales are usually a transmission mechanism for Federal Open Market Committee (FOMC) policy, although far behind housing. This time vehicle sales were more suppressed by supply chain issues than Fed rate hikes.
by Calculated Risk on 2/01/2024 12:37:00 PM
Today, in the Calculated Risk Real Estate Newsletter: https://calculatedrisk.substack.com/p/inflation-adjusted-house-prices-23-56a
It has been over 17 years since the bubble peak. In the November Case-Shiller house price index released yesterday, the seasonally adjusted National Index (SA), was reported as being 70% above the bubble peak in 2006. However, in real terms, the National index (SA) is about 10% above the bubble peak (and historically there has been an upward slope to real house prices). The composite 20, in real terms, is 1% above the bubble peak.
People usually graph nominal house prices, but it is also important to look at prices in real terms. As an example, if a house price was $300,000 in January 2010, the price would be $425,000 today adjusted for inflation (41.5% increase). That is why the second graph below is important – this shows “real” prices.
The third graph shows the price-to-rent ratio, and the fourth graph is the affordability index. The last graph shows the 5-year real return based on the Case-Shiller National Index.
The second graph shows the same two indexes in real terms (adjusted for inflation using CPI).
In real terms (using CPI), the National index is 2.3% below the recent peak, and the Composite 20 index is 3.2% below the recent peak in 2022.
In real terms, national house prices are 10.4% above the bubble peak levels. There is an upward slope to real house prices, and it has been over 17 years since the previous peak, but real prices are historically high.