Dr Sanjay Chaturvedi, LLB, PhD
By Accommodation Times News Services
The age old problem of “less liquid” Real Estate is turning away investors. World over real estate is in securitised form and exchange traded products based on real estate including Mortgage Backed Securities and Real Estate Investment Trusts (REITs) have proven real estate one of the best options for investments.
But since India is not open up for such securitised ideas and forms, real estate investment has become nightmare to general investors. Lack of acumen and deep knowledge of the industry is now failing investor’s expectations. Price have been stagnated ever since 2011 and may remain stagnated with very little margin for appreciations. Huge supply in all metros and towns made the stock a “Dead Investments”. Top of it regular maintenance charges and up keeping physical assets have gone very high. Less liquid nature of real estate is locking regular fund flow in the sector. Investors are now shying away from direct investments.
World over, real estate investments are done for a period of less than one year. Some times it is kept for seasonal boom in a year also. Investors are preferring to invest indirectly into real estate by opting to invest in Funds and securities based on real estate. REITs and Hedging along with FII are now preferring to invest in securities instead of projects.
This is the reason where in spite of such sluggish markets, real estate stocks are going strong. More IPOs are planned and are in pipe line. MBS and NCDs will flood the market with exit options like listing on exchanges. A new era is starting for investments in real estate where investors do not want to confine with only one builder or one project but to mitigate risk, he wants to go with exchange traded securities and much liquid funds.