“Real Estate ..Yet to be Hassle free Investment “ 20th November,2007

“Real Estate ..Yet to be Hassle free Investment “ 20th November,2007
Real estate a word which fascinates everyone and treated to be known as one of the best investment avenue . Since from 2000 there is a significant run up in the real estate prices in India , Investors looking at real estate as one of the best investment avenue .But there are other best Hassle free investment avenues are available in today's sophisticated financial markets. Value creation no longer happens only in the exclusive realm of so called blue chips and real estates . There are some stocks and funds given far superior returns when compared with real estate . Rupees one lakh invested in 2002 in a company called unitech would have been worth of 5.84 crores by April 2007 or 1.52 crores if it had been invested in Aban offshore. This is not only far superior returns and also hassle free return. when compared to your plot or flat in NCR area (National capital region ) where we witnessed tremendous price increase in real estate prices.
As Investors we should have to maintain a balanced and diversified portfolio when your investments are concerned among all the investment avenues. I want to quickly take you through the variations between real estate and financial instruments and securities . One can't really give the absolute variations but slight variations.
Since from Independence real estate sector known as unorganised sector , but from last couple of years real estate is emerging as a organised sector ,now also 90 % of real estate sector is in unorganised sector only .But still it lacks the basic features of the best investment avenues 1). Liquidity 2) Transparency 3) Pricing Mechanism 4) Security 5) Hassle free Operations 6) Regulatory.
Liquidity: When compared to financial instruments , real estate carries less liquidity factor. Until and unless you are a person deals in the real estate society only , you will get a immediate buyer to liquidate your asset . But in financial instruments you can liquidate your financial assets immediately after it matures or getting your anticipated price . Pledging or hypothigating the real estate assets take more time when compared to the financial securities or funds because of various reasons .
Financial assets are highly transparent in terms of pricing and in terms and conditions. you can actually asses and determine the value of any equity or any other financial instrument with much greater transparency. Procedures and evaluation of value of the financial assets more transparent when compared to real estate properties .
Pricing Mechanism : From last couple of years onwards after the debut of private equity funds , venture capitalist and big corporate players entering the real estate field there is slight improvement in the pricing mechanism in metros and tier II cities but majority of the real estate sector market lacks the true pricing mechanism .un like in west and America in India the pricing mechanism is poor ,assessing or pricing the real estate price is very much complicated in absolute terms, measuring and evaluating the intrinsic value of the real estate is not fairly valued when compared with the absolute government prices are also one of the concern. There is big gap between the market price and its intrinsic value . How one could assess his own flat value ? because some of his neighbor sold his property taking that deal value into consideration will try to assess your property value , there is clear cut price discrimination factor is there .where as in financial assets the pricing mechanism is sound and fair.
Security : If you owns a big and costly real estate assets , until if you have the courage to protect your asset only you are advised to hold the asset in most of the cases protecting the valuable real estate properties from land grabbing and trespassing one of the concerns but in the case of financial assets we have depository and custodian services are there to protect your financial instruments and securities holding the financial asset carries negligible risk and financial assets gives the clear title of ownership.
Hassle free operations: If you want to own a financial asset you need not have to ask your boss permission for leave you need not have to postponed your engagements. it is a complete hassle free operation more because of the improved technology and widen intermediaries in the financial markets as a matter of fact when u want a buy a real estate property directly or indirectly you have to follow more than 28 procedures from Ec to registration.
Regulators: unlike in European countries there is no regulatory body is not there in India to regulate the practices and operations of the companies and the persons deals in the real estate market is a concern there is no ombudsman man or any other consumer forum is not available to consider the constraints and concerns of the real estate investors,.but in financial asset such as equity and other instruments like insurance, fixed deposits and mutual fund etc., there are different stringent regulatory bodies are available in India to regulate the practices of the financial intuitions.
considering above facts, it will take some more time in India for real estate market to emerge as the best hassle free investment avenue.