Residential Vs Commercial Real Estate: Where to invest for higher returns?

financialexpress.com:

2022 proved to be a very good year for the real estate market, both in the residential and commercial segments in India. We expect the real estate sector as a whole to continue to grow in 2023 and beyond.

Real estate investment depends significantly on the investor’s objectives and risk appetite. The points shared below are tips to assist investors in deciding whether to invest in the residential or commercial real estate sector in 2023:

a. This sector currently has a tailwind driving its sustained growth across markets in India.

b. Interest rates are expected to peak this year, and hence its impact on demand will be limited.

c. Supply continues to grow – confidence in developers keeping their commitments across markets has resulted in an increase in supply.

d. There is a balance between the supply and demand, and therefore residential prices are likely to remain stable in 2023. Consequently, there will be limited room for retail investors to make returns on the purchase of real estate inventory.

Robust demand and uptick in supply present attractive investment opportunities for institutional investors to fund under construction projects through debt investments.

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a. This sector is a little different from the residential sector currently. Inflationary and increasing interest rates globally are headwinds for large-format offices in India.

b. Demand for boutique offices and retail spaces will continue to be robust as they are supported by the consumption theme prevalent in the economy currently.

c. The best route for investors in this sector is through Real Estate Investment Trusts (REITs), and at current valuations, REITs are