For the love of real estate

Exploring the attraction of property ownership and whether it adds up

Many investors track the NAV of their mutual funds daily. Some even check stock prices multiple times in a day. They get happy, exuberant, anxious, or fearful at different price levels. Fear and greed often dominate these emotions, influencing people’s reactions.

But when it comes to property or gold, a different kind of stoicism seems to prevail. 

Reasons?

First, there are no readily available price charts for property, and gold is the last resort to be liquidated in traditional households. Second, non-availability of liquid markets for property. And third, the transactions are not easily facilitated.

Be that as it may, for most urban homeowners, a primary residence is often the largest investment. And then, there is also a love to own more over time. So when I saw the report of Jefferies, I was not all that alarmed.

But what surprised me was though India ranks 5th in the world in stock market capitalisation with over 5,000 companies listed, Indian households own under 5 per cent in equities.

So, why is there such a heavy tilt towards real estate? Maybe because in India, buying a property, other than the one to be lived in, is considered as an investment for their children.

In the last couple of months, we spoke with many investors who either owned multiple houses or were contemplating buying one more, and here’s my prognosis.