I do not know why you are against real estate Subra!

This statement is then followed by the following:

1. See over the last 30 years what fantastic returns I have got!

2. Real estate NEVER goes down unlike share markets.

3. God does not make them anymore

4. Mumbai, it suburbs, Delhi, Bengaluru, NCR, …are all places where property prices can NEVER FALL.

………and many more.

Frankly I am not against or for investing in real estate. I feel people should understand things like job uncertainty, interest rates fluctuations, etc. and also see what is happening in real estate – around the world. Like the Economist article at the end of this page…

http://www.economist.com/node/21536592?fsrc=scn/tw/te/ar/risingfromtheruins

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  1. Dear Subra Sir

    It’s absolutely true for US but not very sure of its comparison with India.

    I have a very close relative of mine settled in US for the last 25 years and when last met a couple of months back he was sharing his story. Is a really hard working family who almost toiled for 12 hrs daily made good fortune and was always puped up by the idea of investing in real estate. He have 8 houses – yes eight – and a farm land. He was telling it is all together now just half the value he had in 2007-2008. Just dont know how to come out of it and is seriously considering coming back to india and settle down here the earliest. Good thing is his kids are grown up and well settled and no further liabilities.

    The bad thing i see with many is they consider “flat” as an investment which i understand is just a depreciating asset. But a proper investment in proper land is an excellent hedge against inflation is my understanding if not an appreciating investment. It has many disadvantages like safety, liquidity, legal… but the same time many long term indicators are in favor of it too like increasing population, increasing middle class, growing economy, growing shift of population to urban areas…

    Appreciate your thoughts.

  2. I have been extensively analysing the returns on the real estate in my home town atleast for the last 10 years and have seen a return of 10-25% on each case i knew. I did even missed many chances myself for many years and regretted later. Frankly 4 years back i did buy a property and is having regular enquiry with quotes showing an annual appreciation of 15%. This is the story in almost whole of Kerala except for property having troubles with legal, political, environmental … problems. The appreciation in the Tier 2 cities of cochin is trivandrum is much more (15-20%). I have also found the returns on few land deals 30-40 years old which too have given an annual return of 10-12% minimum. This was the reason i fell for a major investment in land.
    Yes the long term appreciation may be less compared to equity but mind you the returns in equity in last 4 years is not that encouraging either. As always the caveat says – Past performance is not a guarentee for the future results. I am accumulating now the maximum from it and join you with prayers for DP, PJ… 🙂

  3. Sir, if one has cash in hand, property might be a good investment but taking a 20 year loan on 80% per cent of the property might be banking on hope (and hope is not a good strategy). In RE boom of the past decade many of my relatives have made a killing so I am being pressurized to jump in too :(.

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