In continuation with our previous post let us look at a comparison of equity and real estate as an asset class so that we can evaluate the products for which we offer services.
|Liquid||Not easily liquid able|
|Coupled with foreign markets||Relatively decoupled.|
|Market prices determined by handful of FIs||Market prices determined by local economies and domestic conditions|
As an investment equity is highly volatile with daily fluctuations in price whereas Real Estate has a stable value which typically appreciates. It is not that sensitive to external forces.
Equity provides a liquid investment whereas real estate also is more difficult to liquidate on demand.
Equity is coupled with foreign markets and its movements are highly affected by the global scenario, and as we have currently seen it is also dependent to a large extent on foreign investors whereas real estate prices are relatively decoupled and governed more by domestic and local conditions, which was also seen in times of a global slowdown.
On comparing the merits and demerits of both the classes we realize that for a solid investment real estate is the more preferred option whereas for speculative and quick cash purpose equity is preferred. In the domestic scenario where people are risk averse real estate is becoming a more preferred option.