RENT vs EMI

As they say, anything that happens is always for good, and so was the pandemic of COVID-19, from Real Estate industry perspective.

Firstly, it gave the much needed break for the exhausted - physically and otherwise - workforce, including the builders themselves. The eerie silence had a calming effect on the tired and bruised body, mind and soul.

Secondly, it gave much needed time to retrospect, introspect and plan for the future. It also tested the tensile strength of the industry in true sense.

Thirdly, as I had foretold in my blog titled, "Turnaround Of Real Estate, Courtesy COVID-19" dtd. 20.04.2020, the lockdown that followed the pandemic of COVID-19 turned out to be a blessing in disguise for Real Estate Industry which was struggling for survival.

One of the biggest lessons that all of us learnt was the importance of owning a home. The lockdown and it's outcome made me write: "Better to be locked down in your own home than quarantined in a rented one."

The surging sales figures of homes in the post pandemic period duly authenticated by the figures of registration office, has warmed up the lungs and hearts of even the most pessimistic Real Estate enthusiast. In my 26 years long career, I have witnessed many downturns this industry was subjected to. But never have I seen such a strong rebound due to a non-economic reason, like pandemic.

It is indeed song to the ears and spirit to the cold souls to know that not only the prices of Real Estate are going up along with the number of sales, but also the RENTALS are going up at break-neck speed. The pleasant situation has reached a stage where every stakeholder in the industry is in a win-win situation with RENT = EMI becoming a reality, almost.

I studied many examples in various locations across budgets where I found RENT is close to EMI, if not equal. While in some locations, the difference between RENT and EMI is as negligible as 20%, in some pockets the difference is higher. This is a complete contrast to the scenario of the pre-pandemic situation. Either way, the gap between the RENT and EMI has shrunk by 'Honey, I shrunk the kids' proportion.

If the banking sector led by RBI shows a big heart towards home buyer by tweaking some of their policies, the RENT = EMI will truly become a reality. A good dose of Compassionate ROI, Generous LTV, and Long Tenure will make everyone a winner.

This will lead to all-round growth of Real Estate industry in a wholesome manner. While it will encourage the investors with increased RENTAL YIELD, the common people will be encouraged to own a home because of narrow gap between EMI and RENT.

I sincerely hope that all the stakeholders, most importantly banks and government, try to encourage people own a home than rent one.

RENT = EMI could truly be the catalyst for Housing For All.