Is buying real estate a profitable idea?

Improvement in the overall economic sentiment coupled with liquidity due to a recent upswing in the equity markets have renewed consumer confidence in real estate. “Residential real estate in particular has always been a safe investment option. Developer Vijay Wadhwa advises parents to opt for real estate as long-term planning for their child's future. “Especially for parents of the girl child,” he says. “Real estate is probably the best long term investment one can make. It remains in your child's name, and the appreciation in value over the

years makes it a safe and secure option. Or even while planning for your old age, real estate is always an asset,” he adds.

Looking at the present market scenario, the market sentiments are improving, and real estate is among the biggest beneficiaries. “After witnessing slow movement over the past few months, Mumbai is seeing an increase in demand in the residential sector.

Additionally, increasing focus on affordable housing for low and middle income groups has resulted in the launch of several low cost projects, most of which are concentrated in the peripheries of Mumbai. This has also opened up new investment options for those who did not have bigger investment units or major amounts that could be invested,” he adds. “Softening of home loan interest rates and correction in capital values by some developers has resulted in the anticipation of increased demand during the festive season,” says Narpat Mehta, director, Kanakia Group. “We are expecting an increase in demand from both end users as well as investors,” he says.

For many, real estate investment is an essential part of a well-rounded portfolio,” says chartered accountant, Tarun Ghia. “For those who want to be in real estate but in 'paper' form, real estate offers several opportunities: REITs (Real Estate Investment Trusts), options, property oriented mutual funds, and other mortgage backed securities,” he adds. Historically, buying and selling real property, or even long-term owning, has proven to be one of the most profitable, least risky investments available adds Malik. “But keep in mind, the operative term is: 'least risky'. That doesn't mean 'zero risk' - there's no such thing in investing. Prices can always go up or down, relative to other goods and investment channels. So, get educated about the market and the law. Make purchases while minimizing costs like fees, repair charges, interest rates, etc.

Have sufficient cash and other liquid assets to be able to hold until the time to sell is right. Follow these guidelines and you'll never have any reason to regret making real estate investing a major portion of your portfolio.