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Where to Invest - Equity or Real Estate?


 Where to Invest - Equity or Real Estate?
Holders of spare cash or an extra income are often confused about which segment to pick up when it comes to Real Estate and Equities. Both have its own set of merits and demerits. Current environment in India is such that it is a difficult choice between the two. Real Estate is in bad shape and inventories are piling up though the rates are more or less unchanged but the real demand is sidelined.

Genuine buyers are waiting for the prices to fall a bit and they will be able to afford the house while investors are waiting hoping that the prices would come down before they chip in for investment. Real returns depend upon what point you enter in the markets. Stagnant prices are discouraging both, buyer and investor.


In case of equities, the performance of most stocks is lackluster. Even if you consider benchmark indices like NIFTY, they have been going down the barrel on the uncertain political environment. An investor in Equity markets is confused on which way the markets will go in the coming weeks. Taking both areas into consideration and given that you have to choose one option out of the existing two, some facts should be considered.

The corpus of Funds is different

The corpus of funds in equities and real estate is different. A person who is investing for the purpose of wealth creation with a particular set of return and time in mind should be clear on the aspects. In Equities, the investment can be increased and decreased as per the whims and fancies of individual but the same flexibility is not available with Real estate.
You might be attracted towards a ready to move 2 BHK flat worth Rs 45 lakhs and you think that the location and approach to the property will fetch you somewhere close to Rs 60 lakhs in a year. Remember, for this, the required sum of investment is Rs 45 lakhs. Things are different in case of under construction flats that cost much less and the returns are higher if you hold for long. But, a particular set of money is dependent on property value.


Crux of the Matter

If you have the large cash backing and have an idea of investing in properties, go for it for better and handsome returns. But, in case of slowdown, do remember that your investment will take time to get reimbursed. Equities are preferable in case you want instant liquidity or when you want to control your investment. Ethical investors often prefer Equities over Real Estate. In Realty, the component of black money and demand for black money is higher and this is why the transparency in transactions is lower. It is very difficult to find a genuine dealer or party.


Read more about: real estate equities
Story first published: Thursday, April 25, 2013, 11:16 [IST]
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