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Real Estate as an Asset Class

Jyotesh G. Narang Realtor, Life Inspiration Advisory LLP, Pune ·

At the onset, I respect all asset classes. My belief in real estate as an asset class — as an investor and realtor in Pune, India — excited me to blog. I firmly believe real estate should be a part of a healthy wealth portfolio.

There are many asset classes: equity investments, fixed income, property, and others. Real estate provides diversification of assets. Good investments have the potential to let us live the life of our dreams.

In a real estate investment one can expect:

  • Rental income
  • Capital appreciation
  • Slower but steadier capital appreciation in the long term

A combination of rental income and capital appreciation certainly beats inflation if held for the long term. If invested properly, returns from real estate outsmart inflation by miles.

“Buying real estate is not only the best way, the quickest way, the safest way, but the only way to become wealthy.” — Marshall Field

For existing real estate investors

  • Disruption could have dented your ROI as an investor.
  • Focus on capital appreciation in the future.

For new investors

Look out for opportunities and deals during disruption. Invest small. Spread the risk. Look at pre-leased properties like small commercial shops or offices — ROI anything over 5% with a long-term view on capital appreciation. Bank loans are lower than before. Balance your portfolio. Spread the risk.

Can you monetise your holiday home?

Yes — if invested in preferred destinations. It will generate passive income and, secondly, it will be maintained. You have created an asset for the long term.

Other forms of real estate investing

  1. REIT (Real Estate Investment Trust)
  2. Fractional ownership

Some data showing capital appreciation

  1. Invested in 1995 — rate ₹680 PSF, area 2,500 sq ft. Today’s sell rate ₹12,500 PSF = ~18.5 times in 25 years.
  2. Invested in 2017 — rate ₹6,250 PSF, area 1,600 sq ft. Today’s sell rate ₹10,500 PSF — ~60% appreciation in 3+ years.

A word of caution

Due diligence is important — take the advice of a trusted realtor. These are my observations through my personal experience as an investor and realtor, and through the experience of clients and friends. I am bullish on real estate for the long term.

Conclusion: the idea to invest in any asset class is to beat inflation and hold for the long term for capital appreciation.

Disclaimer: The views expressed in this article are the opinion of the author and should not be construed as a promotion.

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