Any tool that gives you better yeild than a bank FD is a good investment tool. There are plenty of choices and realestate is one of them. An ideal investment portfolio of an individual will include
5.Unsual investments (antiques,currencies,stamps etc).
How much we allocate into each of the above depends the risk appetite, age of the investor and the time period of large financial commitments and the time frame that they are willing to lock the money in.
Realestate was traditionally applied to owning a peice of land. The huge price boom, unregulated investments, unaccounted investments brought in unwanted attention of land-sharks, bogus land deeds, land mafia and land squatters of all which meant that the land you own can potentially be lost. On top of this came the global economic trends and demonitisation, this led to a slump in realestate ( for example in certain parts of Andhra,TamilNadu and Karnatka) and is now slowly getting corrected.
Choosing to buy realestate physcially
Developing cities, developments in the peripheral city limits would be a good option. One can go in for a plot of land or an apartment. When deciding choose on the seller/developers reputation, proximity to schools,colleges, hospitals, metro stations and parks. Good amenities and connectivity is the key apart from location. Upcoming hubs of IT,finance,trade districts, close to a SEZ(special economic zone).Many developers now offer plots of land within a gated community, these are little expensive than the neighboring small plots but gives a better security and re-sale value.
Present day 'Realestate'
Currently real-estate is applied beyond a plot a land, it can be applied to
a. Mutal Funds specifically focussed on realestate developers/builders/infrastructure
Aditya Birla Real Estate Fund
ICIC Prudential India Opportunities Real Estate Fund
b. equites of construction groups
c.Real-estate investment trusts (REIT - here the fund is allocated to a group of resources related to building or developing land/properties). This allows smaller lots of investments with greater transparency, better returns and spreading the risk. Blackstone-Embassy REIT is reported to be India's first upcoming REIT.
So, real estate would be a good option provided you choose wisely, any investment has a risk including the safe debt MFs, it is how we choose, how much we invest. I would suggest to have a good financial planner or a wealth management firm, choose from one of the above and explore the options of Alternate Asset investment options. In India, the current scenario has all the negatives factored in ( barring a major market collapse), you can consider real estate with a 5-10 year horizon. It is worthwhile remembering that cashing physical real estate investment can be tricky and often cannot be done quickly unless it is a prime property. If you try to encash it in a hurry, you'll end by getting less value as it would be looked upon as a distress sale.