An alternative investment proposition

Second homes or weekend getaways are gaining prominence due to the scope for capital appreciation



The term 'real estate' is defined as land, including the air above it and the ground below it, and any buildings or structures on it. It is also referred to as realty. It covers residential housing, commercial offices, trading spaces such as theatres, hotels and restaurants, retail outlets, industrial buildings such as factories and government buildings. R
eal estate involves the purchase, sale, and development of land, residential and non-residential buildings. The main players in the real estate market are the landlords, developers, builders, real estate agents, tenants, buyers etc. The activities of the real estate sector encompass the housing and construction sectors also.
The real estate sector in India has assumed growing importance with the liberalisation of the economy. The consequent increase in business opportunities and migration of the labour force has, in turn, increased the demand for commercial and housing space, especially rental housing.
Also with the increase in the disposable income amongst the larger percentage of the population in India the concept of investment in real estate has gained popularity in the recent years. Hence apart from the usual investment options like shares, securities, fixed deposits, mutual funds, government bonds etc. investment in real estate has been rapidly growing across India indicating that there is security, stability and a sound return on Investment possibility.
The Indian real estate market is still in its infancy, largely unorganised and dominated by a large number of small players, with very few corporates or large players having national presence. The Indian real estate market, as compared to the other more developed Asian and Western markets is characterised by smaller size, lower availability of good quality space and higher prices.
However, the scenario is changing now. Real estate offerings from developers are becoming more transparent and authentic (though there is still room for improvement). Consumers also are becoming more aware of the pros and corns of Real Estate investment.
Banks and financial Institutions also play a very important role in ensuring that the legality of the transactions is maintained and that there is absolute transparency in the deals executed. Due to this growing awareness amongst the consumers the quantum of investments in real estate has grown leaps and bounds in recent years. Scarcity of space available (specially in larger cities and towns) has resulted in higher real estate prices.
This situation has opened up a new investment opportunity amongst the consumers i.e. Investment in second homes or weekend properties. Investments in this category would be in products like plots, farmhouse or bungalows. The advantages of investment in second homes can be as follows.

• The invested amount could vary from a small value to any higher value thus encompassing a large basket of Small, medium and large Investors.
• Since the land value is ever increasing return on investments are marginally higher than other instruments of Investments.
• There is always a sense of security in the minds of the Investor that he owns a piece of land or property which will sooner or later appreciate in value.
• Second homes provide an ideal place for post retirement stay and relaxation. It is fast becoming a status symbol to own a second home.
• However, as in the case of any other investment proposition, there is a flip side to this kind of investment also.
• Not all offerings made by Developers are clean and transparent in nature.
• Promises made by Developers on sale are not always kept and invariably the consumer lands up on the losing side.
• There is no such regulatory body incorporated which will manage and monitor these investments.

However, despite the shortcomings, real estate investment (especially investment in second homes) as an alternative investment proposition has been gaining grounds in recent years and will continue to grow in the years to come.