subject: Want Assured Returns? Go The Real Estate Route [print this page] MARK Twains investment advice Buy land, they are not making it any more appears to be holding good a hundred years after the American authors death. Whether it is Mumbai, Delhi, or even some of the smaller tier II cities, like Coimbatore or Jaipur, real estate prices have multiplied manifold over the past few years.
In real estate, there is no dearth of multibaggers. There are many cases wherein properties bought for a mere Rs 1 lakh around 1985 are today valued at Rs 1 crore or more. This essentially means money is multiplying a whopping 100 times in 25 years at an annualised return of 20% per annum. For instance, retired professional N Mehta, who bought a one BHK house in Andheri, Mumbai, for Rs 70,000 in 1977, is now receiving offers worth Rs 70 lakh.
However, while buying property makes sound investment sense, not all investors manage to make millions. Take the case of S Ram. In 2000, he invested Rs 3 lakh in an apartment in Nala Sopara, a northern suburb in the Mumbai metropolitan region, and that has now appreciated to a mere Rs 5 lakh in 10 years. But unlike equities, in the property market, even the worst performers have generated returns in the long-term.
On the face of it, it looks tough to find other asset classes such as equities, bonds or gold giving you that kind of return over that period of time. One should hold real estate in the portfolio, though the percentage of how much one should hold could vary from one individual to another, said Sashi Kumar, head (real estate investment advisory), Birla Sun Life AMC. So, what are the ways in which one should invest in real estate and what are the pros and cons of investing in the sector?
Courtesy ET Dtd: 16/06/2010
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