Share Understanding Real Estate as an Asset buy
Real Estate assets are purchased typically for:
Home or Office for own use:
It is never easy to build a home in Mumbai over one lifetime they say. But while buying a property, the focus should be on buying something you like and want to use rather than settling for the best possible price. This is important as the spending on purchasing property is a large percentage of their total net worth for most people.
This is part of a net worth that is typically not available for any alternate use and is money locked in. Self-employed/business persons often allow their personal property to be mortgaged for monies they borrow for business. This should be avoided.
Typically, a home or office for own use is never sold. If sold, it is done as up-gradation after having been bought originally to live in.
This is probably the best time in the last five years to buy a property for own use as prices are low, the government is offering sops, home loans are at their cheapest levels and developers have lucrative options. With RERA creating transparency and payment options available, the risk of investing in an under-construction asset and delays in completion have largely reduced.
Property purchased for future:
This is typically done keeping children or future needs in mind. These are property where one has planned long-term ownership/use. This is not really an investment. This is also long-term money invested in a property that will not really get liquidated or be used to sell & reap a profit. This would be a way for people to park money for future use.
Purchase for Investment
Real estate as an investment class is buying property to make money on it or gain particular returns on it. This can be segmented into:
The current property prices make completed or under construction residential property a very good avenue to park money gains from the equity markets.
Asset Class |
Synopsis |
Performance until 2010 |
Performance since 2010 |
Outlook |
Land |
|
All saw high Capital appreciation High Capital appreciation |
Capital appreciation has not been much |
Should see good appreciation here-on |
Shops Rental |
|
Have done better than the other asset classes |
Already at peak in most locations. Should see moderate appreciation |
|
Office Rental |
|
Decent appreciation |
Appreciation is very location dependant. Prime CBD should do well. |
|
Residential Completed |
|
Decent appreciation |
May see moderate appreciation |
|
Residential Under-construction |
|
Amongst the worst impacted in terms of appreciation |
Should see good appreciation given prices are low |
Request a Call Back