Why Invest in Real Estate

Only those who have put in their hard earned money into ‘bricks and mortar ‘understands its real worth. Yes, we are talking about the real estate investment – the backbone of the Indian Economy.

One of the fastest growing real estate market globally, it is also the 2nd largest economy in the country after Agriculture. Hence, real estate is a popular investment vehicle for everyone. Real markets are going to overturn in the coming year, especially after the Budget 2016. So if you are planning to invest, it might be a good idea to hurry your decision.

It has always been a debatable topic whether investing in real estate is beneficial for the investors. Have a look to know the answer.

Property vs. Shares

According to an analyst with Bank of America Merrill Lynch, while prices being quoted in the housing market might have gone up recently, the end prices are under control because of inflation, discounts available and a range of payment plans being available. Such trends in real estate have been around for a long time. Investor, university lecturer and author Peter Koulizos says, “When you factor in the return and risk associated with buying property and shares, property wins hands down”. That’s because shares might seem to have a slightly higher capital growth. However, there is a tremendous difference in the risk associated with real estate versus the risk associated with shares. The variation of risk in stocks is known to measure anything from +40% in a year to -40% in a week. Compared to that, real estate is a much safer option.

A look at the graph above suggests that despite decreasing prices, gold has been a winner. However, if you are looking for a moderate growth that peaks over the long term, property is the right thing to invest in.

Property Vs. Gold

For years, Gold has been a traditional investment for people because of the fact that it never loses its style. Another reason why people often prefer investing in physical Gold is easy and it can be easily mortgaged for taking loans. However, investment in Property is still far better than investing in Gold. Below are some disadvantages of investing in Gold:

Gold prices vary according to some micro-economic factors. Less transparency while buying and selling physical gold.

It takes a lot of investment to store and maintain gold along with security risks.

Investing in Gold doesn’t offer you any tax advantages.

Also, it is just a long term investment. There’s no source of regular income in form of rent or dividend.

However, in case of real estate investment, there’s no security risk plus a steady rise in the market prices offers stability to the investment. In addition, benefits on the investment can be increased through repairs and renovation, every time.

“Owning a Home is a keystone of wealth…both financial affluence and emotional security.”

Suze Orman

Other reasons to invest in Real Estate

Regular Source of Income

Investing in land acts as a regular source of income for the investors.Forget construction! Forget renovations! You don’t need to be an expert to buy land. In most case all you need to know is whether someone else can build a building on the land. As long as you can do a little bit of analysis and invest at the place which has potential to grow, the income from owing a land is going to grow consistently over the years. In addition there are no utility bills to pay, insurance cost in minimal. It’s a complete win situation. So if you are looking for a place where you can park your cash safely and forget about it, what better avenue than investing in a vacant land!

Tangible & Easy Investment

Land is a tangible asset. It doesn’t wear out, it does not depreciated. It gives you a larger sense of ownership. Moreover, it cannot be broken, stolen or destroyed. Compare this fact with any other investment method such as gold, shares or actual buildings and you will realise that indeed it is a great asset. Moreover, the investment in land is a simple and transparent process and not as complicated as investing in shares and stocks. Since plots are available in various sizes and various locations, you can invest in a pot that best suits your budget and requirement. You may even decide to construct a home in a few years.

High Degree of Leverage

To have a feeling of ‘ownership’ is the biggest thing when it comes to investment. It also gives you a peace of mind. Real estate is the only investment offering you the ability to acquire ownership. With this degree of leveraging, you can increase your profits by using other’s money. The degree of leverage is equal to ‘dividing the total purchase property price by the amount of funds used to purchase it’. The more assets you control, the greater are the chances for you to succeed. And the more the leverage, the more equity will rise or fall with the change in the property value.

“So, if you want to make most out an investment, put your hard earned money into real estate purchase that will give you a long-term, regular return, that to, without any risk.”

In a nutshell

Unlike stocks, mutual funds, gold and commodities, the chances of downfall in value of real estate investments is extremely low in india.


Investing in property is the safest way to secure your retirement – properties give you uninterrupted, passive, inflation proof stream of income.

In India, real estate investment is akin to a FD that commits 15% returns year over year with almost zero risk.


Reasonable good research will lead you to real estate investments with CAGR of 15% plus per annum in Indian conditions – only equity gives better returns – but even equity has ups and downs.

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