• Investing in Real Estate – A wise decision?

    While making an investment, we often tend to think whether real estate is an ideal investment asset class when compared to gold, equities, Mutual Funds, etc. From what the analyst has found in their reports, it’s confirmed that despite the erratic performance of the real estate industry, it has still managed to be prized asset. Below are few of the examples that proves the same –

    Appreciation of Capital
    An interior decorator had only Rs 25 lakh to invest when she was advised to opt for mutual funds and gold rather than real estate. However, after doing some research, she realised that real estate is as an ideal asset class to invest in which is beyond the emotional urge to just own a home. The recent statistics have clearly indicated how no other asset class had given the CAGR (Compounded Annual Growth Rate) as high as property, despite the ups and downs in the real estate sector.

    Time – Tested
    Investment in property has been proven to be fruitful since it is a time-tested investment globally and therefore many investors choose to go with real estate. If the amount of investment is less than the investor can only afford a property on the outskirts of the city. While making an investment one should keep the area’s development in mind which will make it the best investment bet.

    Statistics
    The statistics of the ROI shows that over a long period of investment, real estate investments has always been the best and favorable ones. There has been cyclic ups and downs in the other asset classes like gold or equity which may look more attractive but the still cannot match property.
    It’s better than investing in the stocks which are highly unpredictable and can anytime fall from bull to bear position. Sometimes these shares can of the companies which are on downside where there is absolutely no hope of recovering the losses. However, incase of a property, there can be cyclical ups and downs but if you are determined to stay invested, you will not only recover, but also make gains in the future whether it’s a residential property or commercial property.

    Some of the other facts are listed below:
    – If Gold has given 12% of returns, residential apartments have given 16% returns and commercial properties have given even higher returns.

    – Real Estate is the best bet against the inflation hedge, as it is the only asset that looses title value in the periods of rising prices.

    – In investments like Mutual Funds or Insurance, only a limited amount of investment is covered for tax saving purposes. Also, in other investment instruments like Gold, there are no tax benefit as such.

    – An investment in property also ensures financial freedom for Indians. Now with the REITs becoming a reality, real estate scores over other asset classes and provides an investor with financial freedom.

    – Despite market being at a two year high, only two stocks are similar high. Most of them are languishing. In contrast, the momentum in the real estate may have slowed down, yet there have been a constant appreciation in the range of 5 to 20 percent.

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