Real Estate Investment in 2025: Knight Frank's Zaidi Shares 'Must-Know' Insights | EXCLUSIVE

Planning to park your money in the property market? Mudassir Zaidi, Executive Director at Knight Frank India, answered all your key questions in an exclusive chat with Republic Business. From the booming growth in real estate to where to buy, what to check, what to avoid, and everything in between—This podcast covers it all to guide your investment decisions.
 

Question: Can you give an overview of India's current property market?

Answer: The property market has seen a significant revival post-Covid. After struggling for years, the market started improving as investors realised the worst was over. Trophy assets in Delhi, particularly South and Central Delhi, saw major price discounts, which attracted smart investors. Over time, demand spread to other parts of NCR and commercial properties. While prices have started to plateaue recently, interest remains strong, with office leasing expected to hit a record 80 million square feet in 2024.
 

Question: How do you foresee the real estate market in the next 5-10 years?

Answer: Real estate is cyclical, with periods of growth and stagnation. The last downturn lasted longer than usual, and now after four years of growth, we expect a plateau. Over the past 12 years, real estate has seen a compounded annual growth rate (CAGR) of 6-7%, which is modest compared to other asset classes. The key factors—rising incomes and lower interest rates—mean that property remains affordable despite recent price increases. Long-term investors will continue to drive the market, and the short-term investors pulling out may help stabilise it.
 

Question: Recently, there have been reports about 100-500 crore flats. Are these market gimmicks?

Answer: No, it's not a gimmick. In Delhi NCR, more than 100 flats worth above 50 crore have been sold this year. The market for high-value properties is growing, particularly in areas like South and Central Delhi, and Gurgaon, where entrepreneurs and wealthy individuals are buying. Apart from the status, these properties offer unmatched amenities and spaciousness. For example, Gurgaon offers gated communities with golf course views, large clubhouses, and spacious apartments, often 10,000–20,000 square feet. The price per square foot in these areas can be around 60,000-70,000 rupees, compared to 30,000-35,000 rupees in average luxury segments.
 

Question: Is it practical for young people in their 20s to think about buying a home?

Answer: It’s not too early to think about buying a home. However young people may prefer mobility initially, but it’s wise to invest early, even in peripheral areas or tier-2 cities. Tier-2 cities like Lucknow, Jaipur, and Chandigarh have seen significant real estate growth in recent years.
 

Question: Can you suggest some emerging cities for real estate investment?

Answer: Apart from metros, state capitals like Lucknow, Jaipur, and Chandigarh have seen tremendous growth. Cities like Bhubaneswar and Indore are also gaining importance for investment, with price increases of 25-30% per year in high-demand areas.
 

Question: Is it a bad idea to invest in Delhi NCR, Bangalore, or Mumbai right now due to market stagnation?

Answer: No, the market isn’t stagnating. Price growth has slowed, but there’s still some growth. It will be single-digit growth instead of the double-digit increases seen earlier. The market remains cyclical, so we’ll see a few more years of growth before demand slows down.
 

Question: If someone has ₹50-70 lakh, where should they invest in Delhi NCR for a home?

Answer: In areas like Greater Noida, prices have risen, making it challenging within that budget. However, peripheral towns like Sonipat, Panipat, Karnal, and areas near UER2 and NH8 are seeing significant development and are good investment options.
 

Question: What advice do you have for someone earning under ₹1 lakh, aiming for real estate investment?

Answer: It's crucial to diversify risk across asset classes—real estate, equities, gold, etc. Those early in their career should start small, ideally saving up a 20-25% down payment and considering home loans. Real estate requires early entry, as prices rise over time.
 

Question: Real estate isn't a very liquid asset. If I invest in property now and want to sell it later, say in 5-10 years, what are the options if I need to liquidate it?

Answer: Real estate is not liquid, meaning selling it quickly is challenging. Even if the property is in demand, transactions take time due to negotiations. Unlike equities, you can't sell it instantly. You might need to sell it on the open market and transfer it to another buyer, paying a transfer fee, rather than getting a refund from the builder. If you have bought at an early stage, the price could increase once the property is completed. Buyers will typically pay more at this stage than they would at the project's initial phase.
 

Question: What key metrics should an investor consider?

Answer: Investors should focus on the developer's track record and the potential infrastructure developments in the area. Track record ensures the project will be delivered on time. Infrastructure like new roads or industrial policies can increase the property's value. Rental yield is the annual rental income as a percentage of the property's value, while rental income is the actual amount earned from renting the property.
 

Question: If someone has a 5-10 year investment horizon, should they invest in land, commercial real estate, or something else?

Answer: Land has historically provided the best returns due to its scarcity and potential for growth. Land investment is more difficult due to title issues but offers significant long-term appreciation. However, not everyone can afford land, so commercial properties like offices and retail spaces also provide good returns, especially in growing economies like India.
 

Question: Can land lose its value if it's not being used immediately?

Answer: Land value is driven by its potential use. Land in areas with planned infrastructure, like in Noida or Gurgaon, has seen significant appreciation due to its conversion into residential or commercial spaces. However, land in less developed areas may not see the same growth. Understanding the potential use of land is key to determining its future value.
 

Question: What are the returns in commercial real estate?

Answer: In today's market, cap rates are about 7-8%, with returns ranging from 5.5% to 6.5%. Capital value increases are 3-5%, leading to total returns of 10-12%. Leverage can further increase returns if loans are involved.
 

Question: Why not invest in larger malls, considering there are many "ghost malls"?

Answer: Commercial real estate is doing well. But malls are facing issues. Developers need to treat malls like a retail business, not just a real estate business. Malls need active management and careful zoning. Developers of successful malls manage them closely, ensuring relevance and high footfalls. Malls with multiple owners face issues with zoning, leading to stagnation. Smaller, well-managed spaces in areas like high streets with regular footfall are better for investment.
 

Question: If one can invest either in commercial or residential real estate what should they chose?

Answer: Residential real estate is generally safer and offers better liquidity. Commercial real estate is suitable for those with the right investment size and expertise. Developers often promise fixed rentals for commercial properties, but these don’t always get rented out. Residential real estate tends to be more stable due to high demand.
 

Question: What should be the minimum investment for real estate?

Answer: In smaller cities, investments can start from 30-50 lakhs. However, it's essential to understand the economic activity and buyer pool in that area. If we go far from cities getting a property for 20 lakh also will be possible.
 

Question: What’s your advice for long-term real estate investors?

Answer: In the long term, real estate generally works out well. Stay rational, invest in areas with expected economic activity, and you’ll see returns over time.