'Under-construction property, land not for me': Know why Capital Mind's Deepak Shenoy is against these investment options

Real estate investment is one of the popular choice for making money in long term as it assures formidable financial returns. But not all support the idea of investing in land, houses, or flats.  Deepak Shenoy, the CEO of Capital Mind, a financial research and investment advisory firm in Bangalore, feels investment in houses is not so wise and exciting as it comes with a lot of complications.

"I don't want to buy a house to invest. Buying a house for me is like buying a car. I want to buy a house to live in. But beyond that the excitement of investing in real estate is zero for me," Shenoy told Mint during an interview. 

Talking about his personal experience with real estate investment, Shenoy narrated how his father had to wait for more than a decade to get hold of a flat in Bangalore. He said that his father had bought the flat in 1980 and he got possession of the flat after 13 years in 1993. 

"The builder charged my father double due to some safety measures. My father had already taken a home loan for the house. After the prices were hiked, he took his LIC policies and put them as collateral against another loan for the house. He was paying 18% on this loan. He got possession of the house in 1993 after 13 years," Shenoy said.

Mentioning another incident, Shenoy detailed the struggle his family endured evicting a non-paying tenant. His mother frequented court for two years to resolve the issue and to forcibly remove the tenant from their property.

The process finally ended in a court order after two years, but it still took an additional three months to evict the tenant from the property. The tenant eventually vacated on the last day before the intervention of law enforcement officers.

"After all that what happened to my father, my mother decided to buy a flat and put it out on rent. We rented an apartment, the person refused to pay the rent or leave. There were court cases, police cases. My mother went to court for two years to battle it out. We were lucky to get possession of the flat after two years. Following this, I was very clear that I don't want to buy a house to invest," Shenoy added.

However, investment in real estate has always been a top choice for the affluent class. A recent study by Knight Frank India and the Confederation of Indian Industry (CII) showed that the Indian real estate market is expected to reach $1.5 trillion by 2034, contributing 10.5% to economic output.

The report highlighted that the residential market is expected to lead with a value of $906 billion, followed by the office sector contributing $125 billion. Also, land for manufacturing activities is estimated to generate a value of $28 billion, driven by rising demand in India, while warehousing is projected to yield revenues of $8.9 billion.

Another Knight Frank report highlighted that India’s ultra-rich are allocating a significant portion of their wealth to residential assets, with a substantial 32 per cent of their investment portfolio directed towards this sector. 

Approximately 12% of India's ultra-high-net-worth individuals (UHNWIs) are considering buying a new home in 2024, showing an increasing interest in investing in residential real estate.