Thursday 10 March 2011

Property, a Dangerous Asset

Property, a Dangerous Asset????

Property as an investment. Does it make sense? How risky is it? Here is a view, obviously focussing more on the western world:

How dangerous is it in India? As always, there is no single valid answer.

If you're picking up a property at an inflated price at a "well-discovered" location, like, say, Nariman Point, Mumbai or Boat Club Road, Chennai or Park Street, Kolkata, or MG Road, Bengaluru, obviously, it can be a dangerous asset class.

However, if you're buying a piece of farm land where the annual yield per acre takes care of your EMIs for any loan that you may take for purchasing such farm land (as many interior parts of India do), chances are bright that buying property in such places is certainly not a very dangerous thing to do.

Ultimately, one ought to look at the Class VIII lessons on probability, Expected Value, etc. and do a quick calculation of the potential returns and the probability of such returns before investing.

Whether you're investing in property, precious metals, commodities, art, wine or whatever!

Regards,

N


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