Real estate outpaces gold in the ‘investment for life’ context.

Investments in India from the age old days have always circled around property and gold. While gold was considered an asset which attached a label of status to your persona; the most prominent use of gold was as an investment security when people belived that gold can relieve you of your worries in times of crisis.

Similarly, property investments were more considered as an option which would get the value for money. But the recent trends in the real estate and the exorbiant gold prices have changed the entire configuration of investments.

People are considering real estate as the best option in terms of appreciation in the present real estate status in India. The high returns on property has completely outpaced the craze for gold in India.

And the most distinguishable example of this is the rush for buying a property around Diwali, and the promotional offers by the developers which otherwise were limited to buying gold in the festive season.
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  • She is right...

    Yep..the return is very high and in a very short span of time..
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  • I would still prefer to buy a small thing on Diwali considering the size of my pocket but it is true that real estate is far more rewarding than any other form of investing. I read somewhere that builders and architechts are offering various schemes to buyers during this festive season.some sections of the society wish to buy a home on diwali other than going for gold, which is a general trend.
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  • Real estate to push growth trajectory: report

    The growth chart of real estate companies as well as scope of getting high returns indicated in the news given below will certainly make you bullish on making investments in red hot Indian real estate. Want to try?

    The Indian real estate sector is set to become one of the biggest wealth creators in the country. Strong GDP growth, the increasing impact of software and IT enabled services, the growth of organised retail, the continued inflows of foreign direct investment and portfolio investment are all spurring its growth.

    The market capitalisation of real estate companies in India, currently around $16-18 billion (Rs 72,000 - 81,000 crore), is expected to rise ten-fold in the next ten years, according to Edelweiss Securities, crossing $160 billion. By end 2007 itself, once companies like giant realtors like DLF, Omaxe and others are listed, the market cap may be over $50 billion.

    Name -----------Market cap (Rs in cr)
    -----------------Mar-04------Dec 18, 06
    Unitech----------324.7-------37,784
    Anant Raj Ind----40----------4,580
    Mahindra G------219.2-------3,358
    Ansal Prop------102.3-------5,617
    Prajay----------19.6--------1,509
    Peninsula-------365.2-------2,827

    Edelweiss, in its report, also states that investable real estate in the range of $480 to 600 billion will be created in the next 10 years. Assuming about 40 per cent of this is funded though equities, it will create a market cap of $160 to $220 billion. "Real estate in India is in a breakthrough phase and is poised to be an important part of the country's growth trajectory, leading to significant market creation," says the report. This follows a 50 times increase in the market cap of the listed companies over the last two years, albeit on a low base.

    Given the tremendous demand for housing, coupled with an improving regulatory landscape, robust economic growth, modernising urban development methods, the realty sector will become extremely attractive over the next four to five years, says another report prepared by SSKI India.

    Residential housing forms an extraordinary 91 per cent of the overall real estate activities in India. "We expect investment in the residential segment to increase at 18 per cent CAGR (compounded annual growth rate) to $107 billion by 2011. Investment grew by 22 per cent in the financial year 2006 to $46.6 billion.

    This is likely to translate into annual requirements of 2.6 billion sq ft of space in the urban areas in 2011 as against 1.8 million sq ft in financial year 2006," says the Edelweiss report.

    Currently residential stocks in India stand at 36 billion sq ft at an average household size of 1,100 sq ft. Conservative estimates claim residential stock will increase by another 11 billion sq ft in the next five years, an annual growth rate of 2.3 billion sq ft. At an average investment of Rs 1,300 per sq ft, it needs an annual investment of 83.2 billion in the residential housing sector.

    Besides the residential three more segments - commercial, retail, and special economic zone (SEZ) - will drive real estate boom, feel analysts. In commercial space, with 80 per cent of the demand coming from the IT/ITES sector, a whopping $7.1 billion investment will be made in 2011 at a CAGR of 28 per cent during the next five years.

    - Hindustan Times
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