Gold vs Real Estate: Where To Invest In This Festive Season?

While real estate and gold are both well-liked investment choices over the festive period, investors are currently heading to decide which option will yield the highest long-term financial gains. During the festive season, gold investment in India is showing various intriguing trends, but in 2024, the primary real estate trend will be the expansion of investment in inexpensive housing on the outskirts of tier 2 cities. Here is a detailed comparison between gold and real estate for individuals who want to increase their wealth and acquire financial assets. This will help them make smarter investment decisions during the current festive season.

Why To Invest In Gold?

While both gold and real estate are popular investment options during the festive season, real estate offers a more solid opportunity for long-term growth. Property prices, especially in key metros like Mumbai, have shown consistent appreciation, and the festive season often brings attractive offers and discounts from developers. Real estate also offers rental income potential, providing a steady cash flow in addition to capital appreciation. Though many believe that gold is a safe option, its returns are limited to market fluctuations. For those looking to build wealth and secure tangible assets, real estate is the more promising option this festive season, as per Saurabh Phull, COO, The Guardians Real Estate Advisory.

"Investment in gold in India this festive season is in some interesting patterns. From traditional ornamental to the latest digital gold and the ETF variant of the yellow metal, it grew 40% YoY. Globally, in an uncertainty-marred scenario of global rise in inflationary pressures, gold remains among the most unblemished asset classes. The current price trajectory indicates probabilities of appreciation to Rs 70,000 per 10 gm by the end of the year. The monthly gold saving plan at ₹ 1,000 is attractive to small-ticket investors. Additionally, SGBs offer attractive additional returns of 2.5%. Gold buying increases by 20-25% during the festival season, and hence, an apt time for investment," said Siddharth Maurya, Founder & Managing Director of Vibhavangal Anukulakara Private Limited.

Why To Invest In Real Estate?

According to Anurag Goel, Director, Goel Ganga Developments, in 2024, investment growth in affordable housing in the periphery of tier 2 cities emerges as the strongest real estate trend. Cities like Pune, Coimbatore, Indore and Jaipur are witnessing such segments realizing an annual appreciation of 15-18%. Real estate in the segment of Rs 30 to 45 lakh has the highest demand as the home loan rates are now stable and the government schemes are beneficial for first-time homebuyers. In these areas, infrastructure improvements, particularly in connective infrastructure, are increasing both end-user and investor demand. In these markets, the ROI potential consistently outperforms that of metropolitan areas.

The festive season, particularly in IT corridors and upcoming business districts, has been a hotbed for investment in real estate. Office spaces across prime locations such as Bangalore, Noida, and Chennai are seeing average rental yields of 8-10%. There is great potential for smaller commercial units of about 1,000-1,500 square feet which are in high demand owing to the co-working space revolution. Commercial property yields in the United States are expected to be around 12-15% making REITs a great option to invest in, stated Aman Gupta, Director of RPS Group.

Conclusion

Given that Indians have historically made gold and real estate investments, particularly around the festive season, investors should always choose investments that align with their risk profile. Real estate and gold each have unique benefits and drawbacks, and which one you choose is primarily dependent on your risk tolerance, investment horizon, and financial objectives. Since all asset classes have distinct benefits and satisfy various investor preferences, a balanced portfolio ought to build wealth over time.