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Property as an Investment Vehicle

Property was the one of the first investment vehicles available to the modern man. Real Estate has always been a value asset and its value continues to appreciate with the passage of time. Of course not all areas, or types of properties will see the same kind of appreciation, but one has to agree that given the limited inventory of property available it has a greater chance of appreciation than most other assets.

The sector as a whole is expected to rise in the next few years given the market-friendly government and reform oriented policies on the anvil. The Indian economy has been liberalized for the last two decades and we are now well into the second generation of the liberalized populace. This generation has seen affluence grow to new heights and have the disposable income to afford new homes solely as investment vehicles rather than buying homes for self-consumption.

Investment adviser Harsh Roongta writes in the Forbes India magazine, “You should definitely invest in real estate as long as you have a fairly large portfolio and only some portion (up to 30-40 percent) is allocated to this asset class. But don’t delay buying your own home.”

Roongta, however, advises against investing or buying an under-construction property.

One of the emerging trend in the real estate industry has been that the NRIs – a sizeable and fairly affluent investor community – has taken to the Indian real estate sector in a big way. Several NRIs have been queuing up to park their funds in the Indian real estate sector and cash in the benefits.

At the same time the reverse has also been a very prominent trend – Indian investors looking for real estate investments outside India, typically the destinations have been Dubai, UK and the US. This trend has caught up with the upwardly mobile and constantly travelling Indian populace with high disposable incomes and frequent travel engagements.

“Indians accord a second-home status to Dubai and they are coming there in huge numbers to live, work and invest with a long-term perspective. Lower interest rates, lucrative yearly rental yield, security, tax-free returns on investments and attractive payment options are additional triggers for driving them in huge numbers,” said Ranjeet Chavan, Director of SPF Realty told the Economic Times.

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