Business & Investment

Nithin Kamath, founder of Zerodha, said of investing in real estate:

The founder and CEO of the online brokerage platform Zerodha Nithin Kamath talked about investing in real estate in a series of tweets. When investing in real estate, Kamato said the question is whether real estate yields are higher than inflation. He added: [is] If negative, prices need to rise by at least 10% each year to overcome inflation. If not, the price should double about every 7 years. ”

He further explained that for real estate prices to rise every seven years, rents need to rise as well, which does not happen in many parts of India. Kamato added that real estate prices can rise without good fundamentals, like stocks, real estate, cryptocurrencies and other markets, but “price doesn’t last that long.” ..

The founders of Zerodha added that for real estate, rental yields are likely to be the best measure of fundamentals. He added, “Real estate is illiquid, much like a private market valuation. The actual price claimed by the seller and the final transaction price can be quite different. Another risk is: Price fluctuations are not available via SIP like stocks and MFs because prices are fixed and prepaid. ”

He said the return on investment or ROI could be better towards the end of the Twitter thread purchases, where prices are not yet highly valued, especially in the suburbs of the big cities Tier 2 and Tier 3. .. Mr. Kamato emphasized as follows. “But this is like buying small caps in the hope of becoming large caps. This is a risky strategy and you need to lower your capital allocation.”

But this isn’t the first time Kamato has talked about investing in the real estate sector. He said in a tweet on Sunday that ROI outperformed inflation and interest rate costs, and until the early 2010s, overexposure to real estate was successful for investors over the age of 50.

He added that it is no longer the case. As a result, people currently in the 50+ age group need to rethink their investment in this sector.

He further explained: “At today’s prices, real estate is unlikely to outpace inflation + interest costs in the long run. Homes provide economic and emotional security, but the economic return on investment remains the same. Not enough to cover retirement. ”

Meanwhile, Knight Frank India Sisyl by Jar, chairman and managing director of real estate consultancy, said, “The rise in global commodity prices has led to significant increases in construction costs and house prices over the past six months.” rice field.

Read again: The real estate sector is again facing difficult times, warning Knight Frank India

Read again: Delhi-NCR inventory overhang reduced to 27 months in the second quarter of 2010: ANAROCK

Nithin Kamath, founder of Zerodha, said of investing in real estate: Nithin Kamath, founder of Zerodha, said of investing in real estate:

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