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  • Category: Miscellaneous

    Are educated mass moving away from real estate as an investment avenue?

    Nowadays, the stock market is booming like anything. It is booming because of liquidity and not because of any change in fundamentals. Domestic mutual funds are buying stocks heavily. When asked about the reason for so much buying in stock markets, their answer is people are heavily investing in mutual funds rather than in real estate. Are educated mass moving away from real estate as an investment avenue? What could be the reason for real estate to lose its shine?
  • #599229
    A very good thread from Mr. Nalla. Yes, educated middle-class are slowly moving away from investment in real estate. This is because of variety of reasons. The sector is least regulated. The sector is full of corrupt people. Property dealers artificially control the price; price is not determined by normal deman-supply equation. Moreover, due to delay in courts, disputes take a lot of time to get settled. These are some of the reasons for shifting of middle class from this sector.
    It is expected that REIT may change the dismal scenario to some extent.

    Caution: Explosive. Handle with care.

  • #599232
    Mr. Rao, Your observation is correct. Many young people are not showing interest in real estate investment. After demonetization there is a lot of stagnation in real estate business. This may be due to non availability of liquid cash with people. Real estate sellers can't accept total money in the form of bank transfer or demand drafts. So there is a hold in the business. No buyers and rates are not coming down. I think it may take more time for good activity in this line. Another problem in this area is corruption and unreliable people are more in this trade.

    Because of this these educated middle class people are moving towards mutual funds and stocks. But I don't know how long it will continue. The share prices of small small companies operating with marginal profits are also increasing. What may be the effect. Wait and watch.

    drrao
    always confident

  • #599234
    Are educated mass moving away from real estate as an investment avenue?
    When the question is posed , then it means that educated people were earlier in real estate business.
    I do not think so.
    Education and entrepreneurship are two different things.

    In my life I have not seen the real estate brokers or the real estate investors to be much educated or can fall into the so-called educated group. They were and are mainly people who could sense busies and look for profit giving opportunities. Many things have to be overlooked and even ignored and violated. Not all can or will do that. As most educated people are taught to comply norms and rules and regulations, and get into employment where there is a need to comply rules and regulations they are habituated to a risk avoiding life and keep away from risky ventures and gambles.. They may also not have the required money to invest in real estate which sometimes can be a gamble.

    Unlike real estate dealing with stocks and mutual funds can be done in the cosiness of one's home and office. So the educated people who are now tech savvy or computer savvy prefer to deal with stocks and mutual funds.In relation to real estate they are more liquid also.

  • #599253
    Yes given the galloping cost escalation of land value and rates of apartment in each city, the middle class and salaried class who are saving some money for the future cannot able to invest in real estate and thus looking for greener pastures by investing in Gold and shares. That is the reason being so the share market is agog with activities and after demonetization effect the money transaction has gone down, no more acceptance of black money in real estate and thus stocks are being purchased and the payments done through bank demat accounts. That is why the boom.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #599257
    Venkiteswaran sir, I have used educated mass moving away from real estate because they are the ones who can understand what are mutual funds and what are stocks. Uneducated people anyhow won't understand what are stocks and mutual funds.
    Previously real estate was a charming asset class for both educated as well as uneducated but that trend is changing among educated ones.

  • #599268
    @599257........"because they are the ones who can understand what are mutual funds and what are stocks. " I agree after making slight amendment that ''who can more easily understand'.

    The other day someone who is not formally as educated as me was advising me about the benefits of investing in MFs which he is doing with the help of a stock broker/ financial agent as the bank interest have come down much. He knows that I had some banking background and knows that I am loyal to bank deposits. That is why I said that education is not the criterion for investing in MFs. It is the knack of sensing where profit is.


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