An asset that always appreciates in value.
Demand will always be there as land is of limited availability.
Rental Income is like interest to your principal and Land appreciation is capital appreciation.
Real Estate - My thoughts:
An asset that can appreciate in value, but not always. People are not selling in loss. Remember, if it stands at the same price for over an year, you are at loss.
The demand and supply nature of real estate is for those who are usually dealing with it and who are well versed with it.
Its a very big investment and your first house is not your asset as it doesn't give you income and you don't see it in the investment perspective
Its a very illiquid instrument and its very hard to find the client to sell the asset at the desired price at the required time.
When you are investing in real estate, most of the people are highly leveraged, and boosting their returns. You know that its a risky investment and if you are ready to invest with high leverage, you are going to get high returns. In the year 2010, Real estate was at the boom and land prices increased @165% and please don't expect it to happen year after year.
There is a saying in Tamil which can be translated to English as "Built a House and see; Do a marriage and see." Literal meaning is "Doing a marriage and building a house is really hard"
But now-a-days, people easily fall prey to many builders (reliable and unreliable by their name) to their cheesy words and give their hard-earned money to them and delve into their work caring less about their home.
And builder makes a great fuss out of it and people who buy it may be forced to face either
(i) wait for few more months for possession
(ii) Agree on what was already built
(iii) Pay extra for unnecessary things that might not be used/non-agreeable terms
And many more... and gets frustrated about this later.
So you say all the above will be applicable only when you buy a flat and not when you buy a plot and you built it. Yes, thats when all the problems lie right on your head. You will hire a contractor and you will be at the mercy of the contractor. If you don't know him already and if he is handling many projects at the same time, you are screwed. Forget about the money, you will always end up paying more, you will not be finishing the project on time if you are not following up.
This following up is really a big key in real estate, when ever you building a flat or building in plot. Even when you are getting a loan for your house, you need to follow up.
Wouldn't it all be better if we had some rules and regulations in here. Complaints and solutions in common place. I don't think it would give solution to all the problems. At least it will give some regulation in the real estate market , what SEBI did to capital markets, and investors can freely get the assistance of them after SALES.
Remember, if you are sold the flats, and after a year you are facing a problem and you find the flat promoter in other name sitting pretty well in another place. What can you do today. File a case. It will run for years. He would have changed his name the very next year several times :)
And still the case will be running and such is our judiciary. This is where Regulation of Real estate would help us all.
TATA HOUSING has recently proposed the real estate regulation and I don't think it will come anytime soon though.