Obsession with buying a house: Why do Indians prefer real estate?
Real estate is a capital guzzler, illiquid, immovable and indivisible. Also, it is cumbersome to acquire, maintain, liquidate and bequeath.
Capital guzzler: Many times, a single piece of real estate will constitute almost 70-80% of the client’s portfolio. If that is the case then it is a no-brainer that real estate shouldn’t be considered.
Illiquid: It is not very convenient to liquidate real estate and hence even if real estate is recommended from the investment perspective, the planner has to be careful that the client has substantial liquidity/liquid assets to meet other financial goals and contingency.
Immovable: Irrespective of what the client feels, unless s/he ensures personal upkeep and maintenance of real estate, it is not recommended. In the beginning, there is enthusiasm but over the years, small issues like paying property tax, water leakage in house, pigeon nest and so on can damage real estate. Therefore, invest only if there is time and accessibility.
Indivisible: In times of need, it is not possible to simply sell off a portion of real estate.