Real Estate News
September 13, 2016
More so, in the Indian context, it has been viewed as a personal asset. With the festival time kicking in, it is but natural for people to look at purchasing various assets and housing, as an asset class, has always been at the forefront.
Be it property purchase for endues or investment purposes, housing has always scored over others due to its visibility of good returns over a long-term as compared to other asset classes like gold or the capital market.
"The latter might comparatively give higher returns in the right market conditions but it is cyclical in nature and is subjected to the market dynamics. Also, traditional fixed deposits with banks, though non-cyclical in nature, do not generate higher returns (CAGR in the range of 8-10 percent over a period of time).
Investment in real estate falls in between these two and gives adequate appreciation if invested in the right property. Housing as an asset class, though may not be as liquid as compared to fixed deposit or stocks, it does score highly on its tangible nature and relatively stable appreciation over a period of time," says Anil Sachidanand, MD and CEO, Aspire Home Finance Corporation Ltd (AHFCL).
Sharing the same view, Pakshal Sanghvi, director of Sanghvi Realty says, "Most consumers are investing in fixed assets like a house or land because they appreciate more when compared to other investments such as gold. This investment is not only safe but also generates income if rented out. In the case of shares and mutual funds, their value keep fluctuating depending on the prevailing market conditions.
Also, where gold is concerned, market ups and downs define its value alterations and if gold has to be kept in the bank; one has to pay the rent for the same too. On the other hand, the value of a property escalates yearly by eight to 10 percent. It can be used as an asset to get a loan.
The property can be rented out on a monthly or yearly basis and income can be generated out of it." Gopal Sharma, general manager-marketing, Gundecha Builders mentions, "Real estate prices will never go down; they will always rise and sometimes much more than expected. Although sometimes there is a correction in the rates for a short period, eventually, it is always the most profitable investment unlike the share market and gold where unexpected downfalls have been seen in the recent days."
He further adds that property prices in Mumbai have gone up five to ten times in the last ten years depending on the location a phenomenon that has not happened in any other market anywhere. K Raghuram, an independent financial advisor says, "Real estate as an asset class has been silent for almost three years now. This situation cannot prevail forever. It is also impossible to time market cycles to perfection. Hence, people waiting in sidelines can go ahead and invest."
Choosing a better option amongst the various asset classes will require taking into consideration factors like the investment quantum; risk appetite; time horizon and investment objective.
"Residential investments require relatively lesser quantum unlike commercial spaces for retail investors. It's less risky as it's considered more liquid and tradable within a shorter period of time. It's further more attractive due to lower loan interest rates from financial institutions and government incentives for interest payouts," concludes Gautam Saraf, managing director-Mumbai, Cushman & Wakefield.
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