5 Reasons that make Indian Real Estate a Classic Asset Class

Published on: 27 August 2014


It is considered to be less liquid asset as it takes time to convert it into hard cash in short timeframe.

Real Estate is not a Fungible commodity as it is not capable of being exchanged or interchangeable. A fungible commodity is relatively indistinguishable from other items within the same category and priced on unit basis.

We see the value real estate provides and consider it as one of the classic asset classes for the following reasons with focus on Indian real estate:

  1. Returns – Real estate asset class continues to deliver above-average returns with considerable safety, if executed with some amount of guidance and a local knowledge partner. Home, Work Place, and Infrastructure are interrelated.
  2. Population – Real estate flourishes with increase in population and India continues to experience a good population surge. This surge leads to increase in the need for more residences and demands the people to become more and more capable to buy them at higher valuations.
  3. Shortage ÔÇô With more number of aspirants to buy new homes, real estate prices are expected to remain high
  4. India GDP/Growth ÔÇô IndiaÔÇÖs GDP is expected to clock better numbers and surpass some of its close peer nations in the next few decades. The ability of India citizens to possess high disposable income and to generate more cash augurs well for the real estate sector, supporting the high real estate prices. Therefore, the Indian real estate sector would continue to deliver the goods that we expect.
  5. Development ÔÇô The constant focus and efforts of the government to build on the countryÔÇÖs infrastructure set up continue to augur well for the real estate sector and at its prices. Infrastructure development often leads to population relocation and population surge, which boosts real state demand. Considering IndiaÔÇÖs infrastructure development initiatives, going forward, the various new places to live, and the work coming up in the next few decades, we expect the above-average performance of the Indian real estate sector to continue.

From all the above, it can be ascertained that real estate is a classic asset class that one canÔÇÖt just ignore. We recommend diversifying your portfolio with all of the above asset classes in right proportion, while giving real estate enough importance and weightage it deserves.

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