Bring the Steady Ship of Real Estate into Your Port(folio)


It’s a fresh new year — that pensive season of unmarked calendars and rested minds, when thoughts naturally turn to plans, wishes and goals. For you as an investor, January may be an ideal time to cast a contemplative eye over your portfolio.

Before retooling your investments for 2017, it would be helpful to think of the broader lessons the world learned in the year gone by. If there is any standout message from 2016, it is this: Expect the unexpected. From Indian demonetization and Brexit to the ascendance of unanticipated new world leaders, 2016 demonstrated that abrupt, surprising changes can take place overnight. For many investors, these surprises have encouraged a back-to-basics approach and a newfound appreciation for safe, reliable assets.

Added to this is the rising influence of social media echo chambers, in which one’s personal online universe becomes an ever-narrowing set of ideas, as well as the viral distribution of fake news. These phenomena make it all the more important to keep an eye on common-sense fundamentals and to focus on timeless truths. In terms of where to put your money, there are few concepts more fundamental and truths more timeless than the enduring merit of real estate.

Economic and political changes can create choppy waters for investors. In a sea of uncertainty, real estate—in contrast to many other forms of investment—is like a slow-moving ship. It is steady, not easily tossed by the winds of external events, and tends to progress reliably over the long term in the right direction. These characteristics can make the property market a fitting place to look for stable, predictable returns

Property is especially worthy of investment when purchased at a discount. That way, an extra margin of safety is inbuilt. As business magnate Warren Buffett advises, ‘Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.’

Fortunately, there are methods of purchasing real estate in India today that are specifically geared toward providing discounts to investors. Chief among these are online marketplaces. As a business model, companies such as SmartOwner—India’s first and largest online marketplace for real estate investors—offer investors a way to participate in an early, high-growth phase of a real estate project and then exit profitably. Due to large transaction sizes, an online marketplace has the power to negotiate with developers for rates that are significantly below the project’s launch price. Because of this discount, the property buyer has an immediate upside on his transaction – a feature that creates a margin of safety, thus adding to the overall appeal of real estate as an investment.

Real estate purchased through an online marketplace is easy to incorporate into a portfolio. Units in premium residential developments, such as apartments and plots in gated communities, are available in a wide range of ticket sizes. Furthermore, the relatively short holding period of one to three years has considerable appeal. Evidence shows that once purchasers grow accustomed to the benefits of the marketplace model, they are likely to continue adding new units to their portfolios. In the case of SmartOwner, a strong majority of clients make repeat purchases, often in a diverse span of projects.

As you move forward into 2017 and contemplate your next financial moves, it makes sense to look for stable investments, particularly those which you can purchase the way Warren Buffett would: at a discount. Buying real estate through an online marketplace—the new, common-sense approach to property ownership—enables you to do just that. This year, get back to basics with real estate, the most essential, time-honored way to grow wealth.