Investment in real estate weathers all market blues

The stock market correction over the last two days will have only a marginal impact...

The stock market correction over the last two days will have only a marginal impact on real estate. According to experts, investors generally buy real estate as a long term investemnt as compared to other assets like, shares and gold. The ongoing correction in the stock market, therefore, is not expected to impact the sector.

“Compared to stocks and gold, which are more liquid investments, real estate is illiquid,” said Anuj Puri, chairman and country head, Jones Lange LaSalle-Meghraj. “Investors with portfolios comprising both stocks and real estate could suffer a slight impact, as some investors might want to offload a part of their real estate holdings to offset losses. However, this category of investors is small.”

Some analysts see the current fall as a buying opportunity. “About 10 to 20 per cent of an investor’s portfolio should be in a more stable asset such as real estate,” said Parry Singh, managing director, Red Fort Capital, a private equity real estate firm that launched a Rs 1,000-crore fund on January 9. “So apart from development, investment in land is a good option. Besides, the correction in the market offers a good opportunity to buy stocks of listed real estate companies at more affordable prices.”

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On listed realty companies, however, the going may just get tougher. “This fall will prevent investors from investing huge amounts in the up coming initial public offers of real estate companies,” said Sandeep Singh, vice president and national head (capital markets group), Cushman & Wakefield. “But, the fall will also enable investors to move towards a more stable and long-term avenue like realty.”

A long time horizon will also help investors survive real estate. “If the purchase is made for investment purpose, only long-term investors survive in such a situation,” said Anirudha Joshi, executive director, HIRCO, the investment arm of Mumbai-based construction major, Hiranandani Group.