Akshat Shrivastava, founder of Wisdom Hatch, warned potential investors to avoid ‘speculative’ pitfalls while looking at real estate as an investment option.
Shrivastava claimed that builders in India found a new way to turn real estate into a speculative asset.
In a post on X (formally Twitter), Shrivastava wrote, “A house that costs 1Cr today, Will cost 3Cr in a few years. Why? because the price of things go up when there is speculation on assets. Builders in India found a new way to turn Real Estate into a speculative asset.”
Explaining the rationale behind his theory, he wrote, “Buy under construction, Link a payment plan, Ease the EMI, Lock you for the next 20 years
They make you buy, promising that:
“Price of a flat never really falls”.
“If you buy today, you will be able to sell 3 months from now at X% returns”.
“We sold tower A at X, now we are selling tower B at 2X. You can do the same”.
This game people are understanding now.
What they don’t understand is: REITs is Real Estate on steroids.”
In a rapidly growing economy like India, rising incomes during periods of expansion tend to boost demand for real estate, driving prices upward. The country’s expanding population further exacerbates this demand; as more people seek housing in urban areas, the limited availability of real estate becomes increasingly apparent. This scarcity is particularly pronounced in developing regions where infrastructure improvements are underway.
Shrivastava explained that a house/real estate owned by a REITs firm is an asset for it. They can add a PE multiple, which a builder can’t.
They of course would want to inflate the value of that asset. And, our entire corrupt system will support it, he said.
“Financially ill-educated people, who have not even bought 1Rs of (REAL) Real Estate would tell you how “great” REITs are. Because these have found success in countries like US, UAE. But, brother: laws function in those countries. Not in ours’-- especially when it comes to Real Estate,” Shrivastava added.
How to save yourself from all this? Buy a (REAL) Real Estate, he advised.