In spite of the sluggishness in the real estate industry, the sector still remains as one of the preferred asset classes for investment, say experts. The recent sell-off in financial markets globally, has further increased appetite for real estate investments and the positive sentiment towards the sector will remain so.

Real estate stocks plummeted across the curve in the past few days resulting in people losing crores of their hard-earned money, as fears that the COVID-19 coronavirus pandemic would drive the U.S. economy into a recession intensified.

Heightened fears of a global economic recession led investors to lose over rupees 33 lakh crore in a month.

However, as per a recent survey, real estate continued to remain as the preferred choice for investment. The percentage of people favouring real estate as an investment option also saw a significant increase from the same survey done a year ago. The rise indicates that despite all headwinds within the sector, the prevalent mood among prospective buyers also continues to remain positive.

The results of the survey showed that 59% of participants would bank on putting their hard-earned money on real estate over other asset classes like the stock market, fixed deposits, and gold.

Most participants cited that amid the volatile nature of most other asset classes, real estate continues to remain a safer bet for long term investments.

This coupled with falling property prices and government's efforts to revive the industry with the help of a slew of measures, is seen renewing the both investors and buyers hope.

Why real estate is a better investment option than other asset classes?

Real estate for a very long time has been considered an asset class that generates the highest return in comparison to other asset classes. Apart from generating good returns, it is also considered as less risky due to its tangible nature as it allows full control over it. Even as the industry is in a doldrum at the moment, historical data shows that the demand for real estate will always remain. Analysts in the sector also expect the revival of the industry in the near term amid the slew of measures introduced by the government for the sector and the thrust for affordable housing.

In comparison to the stock market, the risk of loss in real estate is minimized by the amount of time one holds on to the property. While, the risk never changes in the financial markets and one has to factor numerous elements that are beyond one's control.

Another major reason why real estate investment is a better choice for investment is the predictable cash flow it generates. Cash flow is the amount of spendable money derived from the investment after all the operating expenses and mortgage payments have been made.

The aspect that real estate can be leveraged is also one of the vital fact which attracts investors to this particular investment class. In real estate transactions, leverage occurs when a mortgage is used to reduce the amount of investor capital required to purchase a property.

Apart from these factors, the preference for real estate investment is also aided by declining interest rates of fixed deposits.

Government boosting sentiment towards industry

The government's support towards eradicating the sluggishness in the real estate industry is also one of the major factors which have kept sentiment bolstered for the industry. Homebuyers believe that the various government measures coupled with recent court rulings have helped them to increase their confidence to invest in real estate.

Given the potential of the real estate sector and its direct implications on the overall Indian economy, the government announced a slew of measures not just in the Union Budget in July but also all along the following months in order to boost the confidence of prospective homebuyers.

These steps have certainly boosted the confidence of home seekers and a majority thinks that the government is doing a good job to make the real estate sector safer and more viable for investments, believe experts.