Real estate is always the smart investment option!

Authored by Sahil Virani, Managing Partner – Empire Realty (Virani Group)

For decades, real estate has been a preferred investment option, for very obvious reasons-the returns that the asset class yields for people. This fact was reiterated during the covid pandemic when, while all the asset classes were affected by the coronavirus, the real estate asset class didn’t shake its ground and stood still and actually was on the growth path. In this article, understand in detail why real estate is always the smart investment option.

Real estate is a tangible asset

Before investing in a property, a person can physically visit and inspect the property to assess its value, condition and potential for income generation. Real estate is a tangible asset and provides a physical sense of ownership. So, unlike other investments like stocks or bonds, real estate provides direct control over the asset. As an owner, you have direct control over the asset and can take calls on how to improve and maintain it.

Additionally, real estate’s tangible nature makes it an ideal collateral for loans or other forms of financing. There is a more likelihood of banks and other lenders to lend money for the purchase or improvement of a tangible asset like real estate because it can be used as collateral in case of default.

Real estate has a faster potential for appreciation

Historically, real estate has appreciated its value in the long term. So, with value appreciation over time, the property most times is sold at a higher price than what it was purchased originally for. With recessionary symptoms seen across the world and the tech sector being the primary one to be affected, real estate is paving the growth story with an increase in project launches. The segment is working on fulfilling the rise in demand that is seen in the present market.

Real estate provides diversification

A smart investment is when one spreads the risk of an investment portfolio across many different assets. By doing this, the impact of volatility and fluctuations in any one particular market will be greatly reduced. As real estate is not directly correlated to stock market movements, realty prices move independently of other financial markets. Thus, real estate investments can provide a hedge against market volatility.

Also, real estate offers investors exposure to a different type of economic sector which is driven by population growth, economic conditions, supply and demand, unlike stocks and bonds which are driven by various other factors.

Real estate as an alternate source of income

Real estate while generating returns through price appreciation or interest payments can also generate income through rental payments. Thus, in addition to a potential price appreciation, real estate acts as a steady income source.

Finally, while real estate as an asset class is the best option for the masses, there are risks involved while investing in this asset class in the same way as others. Risks such as an intermediary decline in property prices, maintenance of the property and retaining tenants are some pain points. As in the case of all investments, it’s important to do thorough research and due diligence before investing in real estate to reap the benefits that this asset class provides both short-term and long-term.