Property Plus
Coimbatore
Property for an investment?
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Can realty stocks be an option for investors? Let’s explore.
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In the last couple of months, the trend in the stock market has been very interesting. The BSE Sensex isn’t any more adding points in double digit and instead, uptrend has been in 200-300 points. The Sensex is taking fewer days to add 1000 points than in the past. Now you may be surprised as to why are we talking about stock market in the property section of this newspaper! What relevance does it have when you are looking for property investment tips?
If you are one of those who invest in property as an asset and for good returns, then physical property need not be the only option. Owning property beyond a limit can get tough as property needs maintenance unlike most other assets.
Equity
Hence, those who would wish to take exposure to property can look at options such as realty funds and realty stocks.
While property is the most illiquid asset to invest in, it is not the case with property stocks. Since equity can be easily bought or sold, investing in property stocks can be pretty easy. All it requires is demat and trading account (besides a PAN card). Another added advantage is that you can expect tax-free dividend income from these companies which is not the case when you invest in a physical property.
Unless the property is let out, an investor cannot expect cash flow from his property. On the other hand, he would be required to prepare for cash outflow in the form of maintenance.
In the last few weeks, the FIIs have been aggressively buying into these stocks as India’s domestic consumption story has been very promising when compared with other markets.
Access to other markets
As an individual investor, your ability to invest in other regions or cities will be restricted. When you buy into a property company, you will be allowed to enjoy the benefits of uptrend in other cities as the company will be constantly on the look-out for greener pastures.
With the property sector getting more institutionalised, a real estate developer does not restrict himself to residential projects alone.
Today, developers are focusing on commercial projects, SEZs and townships. An individual cannot afford to take exposure to all segments of property.
By investing in a stock, he can hope to do so.
Formula
Investing in property stocks is not a guaranteed formula for earning good returns.
Equity comes with the baggage of risks and hence you can expect plenty of volatility in your portfolio. The biggest advantage is that you can think of your investment even with a few thousands of rupees.
SRIKALA BHASHYAM
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Property Plus
Coimbatore
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