Investing in real estate? - Here is a quick read
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| Real estate investments - Gold mines? |
- Real estate is a good long term investment. The preferable time span for real estate investments is four- seven years for it to give you best returns. The low liquidity results in poor prices in case of distress sales. e.g during the last downturn people had to sell their properties at throw away prices as they were unable to pay their EMIs. Hence only invest long term surpluses and liquidity you do not require immediately.
- Real estate is also cyclical, though the cyles are significantly longer than equity cycles. if timing is wrong, it can also lead to losses or poor returns.
- Invest in areas that are developing, like on the outskirts of the city or in tier 2/3 cities where development is expected to result in strong real estate prices.
- Investing in equity shares of real estate companies can be rewarding if well timed, however, the volatility is significantly higher than stocks of other industries!
- Study fundamental factors before investing in equity shares of real estate companies. Interest costs, land bank, demand for housing, interest rates to home loan borrowers, etc can impact real estate stocks.
- High inflation and interest rates could adversely impact real estate stocks and hence at this time direct investments into real estate would be a preferred option.
- Real estate is also cyclical, though the cyles are significantly longer than equity cycles. if timing is wrong, it can also lead to losses or poor returns.
- Invest in areas that are developing, like on the outskirts of the city or in tier 2/3 cities where development is expected to result in strong real estate prices.
- Investing in equity shares of real estate companies can be rewarding if well timed, however, the volatility is significantly higher than stocks of other industries!
- Study fundamental factors before investing in equity shares of real estate companies. Interest costs, land bank, demand for housing, interest rates to home loan borrowers, etc can impact real estate stocks.
- High inflation and interest rates could adversely impact real estate stocks and hence at this time direct investments into real estate would be a preferred option.
Keep those points in mind and you would be making a more informed real estate investment decision.
The easy availability of land, improvement in infrastructure facility and encouragement from the government, there’s a heavy commercial activity being witnessed in the surrounding suburbs of the metros which has lured prominent developers to come up with projects in these areas.
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