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Wednesday, June 25, 2008

Indian Real estate industry though hit hard by high interest rates, feels that high rate of inflation might be a blessing in disguise

"Historically, if you see, people used to invest either in real estate or gold to hedge inflation. Only in recent times people are investing in shares, but real estate is a long-term investment and so it is the best bait for investment when inflation is higher," Hiranandani Construction's Managing Director Niranjan Hiranandani said.

The higher the inflation, the more the depreciation of rupee and the costlier the properties. Thus when inflation is inching up, people should invest in real estates, the prices of which are certain to go up further, he said.
DNA - Money - Real estate helps in hedging against inflation: Hiranandani


  1. Ravi,

    We expected yout to provide a fair opinion from your side on this subject. Hiranandani, though a respected entity in this country, finally is a supporter of Builder Lobby and will state to the benefit of Builder lobby only.

    The real fact is absolutely different then what he accuses. While Gold is a good hedge against inflation considering the fact that all currencies have a base factor on Gold, Real Estate is wrongly compared with Gold.

    Its a world-wide fact that in an environment of increasing inflation Real Estate prices go down.

    The threat given by Hiranandani that the Real Estate prices will go up is based on a hidden agenda of builder lobby. They are very confident of getting easy finance from - Mafia Money, Drug Money and Terrorist Money. Its big, probably bigger then total GDP of our economy.

  2. Hi Ravi,
    Even I believe that surging inflation will stop property prices from sliding down. It could even be a good time to buy a home if you are a genuine buyer. If the prices stay in this range or correct further, there will be plenty of investment opportunity later this year.

    Most of the people in online forums are desperately waiting for a crash that doesn't seem to be likely.


  3. 1) Thanks Atul and The Boss, for the comments! 2) Atul, this is a blog. What you write is equally important to my writing. If i take one side, no problem, you are there to present the other. Which you do rather well! 3) It could even be a good time to buy a home if you are a genuine buyer. Builder and real estate salesman believe in this not investment advisers! Congrats, The Boss! I am subscribing to your blog.

  4. India Real Estate News- property, properties, developers, builders, Agents, houses, flats, shops, apartments, real estate news from indian.

  5. I believe that the high prices are not sustainable. We havent seen a correction cause builders might be sitting on huge profits and see no reason to lower prices.

    That all could change if the level of inflation remains high for the next 3-4 months. With essential good costing more and home loans at around 12% I dont see many people capable of affording a house.

    Also why would i invest in a house costing 50 lakhs and earn 1.8 lakhs per year rent when I can FD the same amount in a bank at 9% and earn 4.5 lakhs. I think realty as the worst investment option in the current high price low rent situation

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