Famous economist and communist Karl Marx said that Rich people have land, if we split the LAND among all, everyone will be RICH, and he has reasons for that:
1) According to him LAND IS THE
ONLY SOURCE OF INCOME.
2) He thought if one had land,
he/she could do Agriculture.
3) If you have land, you can
construct or build.
Hence, he was justified at that
time, but now…does it still hold good…?
Today land or property is not the
only source of income. Let’s look at it in more detail:
1.
Maintenance and Hassles in Property
Management
Young generation is moving to
Financial assets instead of physical assets. Young generation is relatively
lazy, wants easy and prefer to do it everything with mobile & internet.
In current time do we expect this
young generation to stand in the registration office, stand in queue, sweat it,
bribe people, run from pillar to post, pay #EMIs, take the pressure of #loan
burdens, EMIs, paying maintenance, Property tax every year, Renting out,
Managing tenants, pay brokerage to brokers, maintaining it with painting, woodwork
and so on…
Or they prefer to take mobile/laptop
and buy any financial assets like #mutualfunds, #stockmarkets #equities , #Bonds
#Bank Fixed deposits etc.
Investment in Property…Pain or
pleasure….?
2.
Transmission of Assets
Every property is unique so
distribution among siblings becomes another challenge.
Assume two brothers/two sisters
who are legal heirs. Parents given one property to one and one to other, have
different places, different values.
Now one person always feels that
the other got better or RAW deal, isn’t?? This is possible in Properties and
not in financial assets.
On the other hand, If Parents
have 1 crore Fixed deposit or 1 crore Mutual Funds, one can nominate 50 lakhs
with one son & 50 lakhs with another. Multiple nominees in Mutual funds
& separate Fixed deposit in another.
Easy to divide without disputes…
3. The Legal Complications in Properties
If we check the number of cases in
courts, a large number of disputes are because of the properties. That also
among siblings…within the families (brothers/sisters/cousins etc.) Think of
your family or extended family. Do we want our children to fight over
properties or leave together happily…
Will young generations take this
headache?? Do they have time…?
4. Land Prices will Always go up…doesn’t
hold true now
In developed economies like Japan
and the United States, one can find examples of real estate crashes where
prices have dropped to the tune of 40% to 50%.
In Japan, prices have gone down
& have continued to stay there for the better part of the last decade.
In India also are we going to see
the same….
5. Past Performance is an
indication
In India, people who bought Real
estate from 2000 to 2011, made huge money. But what about People who bought post 2011 till date (after
covid slight appreciation).
In 2011 one Person bought a flat
in my building and in 2023 the price just doubled…means 6% P.a. return,
less than FD returns that also without considering the maintenance and
wear-n-tear expenses.
What happened to Mount Road,
#Chennai? Most office in OMR/ECR today What happened to Nariman point, Mumbai ?
Most offices are in BKC/Lower Parel today.
Online workings, remote offices, and
studio apartments are new trends…
In current scenario there are
various options for creating assets and people want it to be liquid, assessable
and transparent…financial assets are easy to handle, diversifiable and can be
purchase in fractions.
What are your thoughts on this…????
